TFSA Investors: Make $260/Month Without Lifting a Finger

Are you looking for a simple way to earn $260/month in your TFSA? Here’s a safe and easy portfolio for monthly passive income.

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The Tax-Free Savings Account (TFSA) is a wonderful place to earn, collect, and grow passive income. Since any capital held in the TFSA is free from tax consequence, you can really accumulate a strong and predictable stream of passive income.

You can’t hold income-yielding alternative assets like real estate, a business, or a franchise in your TFSA. These tend to be very time intensive investments that require a lot of experience and expertise.

Fortunately, you can buy stocks that earn elevated passive income inside your TFSA.

Buy low-risk stocks for steady TFSA passive income

The best part is investing in stocks requires very little work and attention (other than your initial investment due diligence/research and quarterly results follow up). If you want a simple and easy way to invest in your TFSA, here’s a straightforward portfolio that could earn $260 every month.

Foolish investors should wisely hold a more diversified portfolio (at least eight to 10 stocks), but this model simply demonstrates the type of income you can collect with $60,000 invested in today’s market.

Choice Property REIT: A safe REIT for passive income

If you want exposure to real estate in your TFSA, real estate investment trusts (REITs) like Choice Property REIT (TSX:CHP.UN) are good investments. Choice is a diversified REIT with a large retail portfolio complemented by some industrial and office properties. With a market cap of $10 billion, it is the largest listed REIT in Canada.

Choice has a very defensive portfolio that is anchored by Superstore and Loblaw-affiliated essential grocery stores. The fact that it is up 1.6% over the past year is a testament to the recession-resilient quality of its portfolio.

While Choice is not growing much, it churns out a nice 4.95% dividend that is sufficiently covered by its cash flows. $20,000 invested in this stock would earn around $82.45 of tax-free income every month in your TFSA.

A&W Revenue Royalty Income Fund

Another economically resilient stock for passive income is A&W Revenue Royalty Income Fund (TSX:AW.UN). A&W fast-food restaurants are a staple in Canada. A&W has found a nice niche by delivering quality ingredients at a reasonable price.

A&W Royalty collects 3% of the revenue from the over 1,000 A&W restaurants located in Canada. It generally distributes most of its earnings right back to shareholders.

While it has a variable dividend structure, this TFSA stock is currently yielding 5.4%. A $20,000 investment in A&W Royalty would earn $87.50 of monthly passive income. This is not a growth stock, but it has a strong franchise, and it pays a consistent, growing dividend.

Pembina Pipeline: A solid TFSA stock for income

If you want exposure to energy, but with less commodity risk, you might want to consider owning Pembina Pipeline (TSX:PPL) in your TFSA. Pembina offers a wide array of energy infrastructure and services in Western Canada. Its biggest source of revenues come from contracted pipeline and natural gas processing assets.

Pembina had a banner year in 2022. As a result, the company has a very solid balance sheet and excess growth capacity in it its network. It should continue to deliver solid results in 2023.

Today, Pembina stock yields a 5.7% dividend. It used to pay a monthly dividend, but it just moved to a quarterly dividend payment. If you invested $20,000 in Pembina stock, your TFSA would earn $283.84 per quarter tax free (or $94.61 averaged monthly).

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
Choice Properties REIT14.951,337$0.062$82.45Monthly
A&W Revenue Royalty Income Fund36.50547$0.16$87.50Monthly
Pembina Pipeline$45.90435$0.6525$283.84Quarterly
Prices as of January 6, 2023

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robin Brown has no position in any of the stocks mentioned. The Motley Fool recommends A&w Revenue Royalties Income Fund and Pembina Pipeline. The Motley Fool has a disclosure policy.

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