TFSA Passive Income: Earn $102/Month

The heightened volatility and uncertain macroeconomic environment have made it challenging for investors to generate short-term capital gains. However, one can still make steady passive income through dividend-paying stocks. Furthermore, Canadian investors can earn tax-free passive income using the TFSA (Tax-Free Savings Account). 

With steady passive income in the backdrop, let’s focus on three stocks that are relatively less volatile and have reliable payouts. However, investors should note that dividends are not guaranteed, and any company can announce a pause or cut dividend payouts in an adverse operating environment. Let’s begin.

Fortis

With 49 years of consecutive dividend growth, utility giant Fortis (TSX:FTS) comes across as an attractive investment option for passive income. Its regulated electric utility business generates predictable cash flows that support its dividend payments and growth. Moreover, due to its low-risk business, Fortis stock remains relatively immune to the volatility in the market, thus adding stability to your portfolio. 

Fortis expects to grow its annual dividend at a CAGR (compound annual growth) of 4-6% through 2027. Through its $22.3 billion capital plan, the company expects to expand its rate base, which will drive its payouts. Fortis sees its rate base growing at a CAGR of 6.2% in the medium term, which bodes well for dividend growth. 

Fortis’s solid dividend growth history, predictable cash flows, visibility over future payouts, and a dividend yield of about 4% support my bull case.  

Enbridge 

Enbridge (TSX:ENB) operates an energy infrastructure business, playing a key role in energy supply. Thanks to the high utilization rate of its assets, this large-cap company consistently generates solid earnings that support its dividend payments and growth. It’s worth highlighting that it has been paying a dividend for 68 years. Moreover, its dividend has had a CAGR of 10% in the past 28 years. Furthermore, Enbridge offers a high yield of about 6.4%. 

Enbridge is well positioned further to boost its shareholders’ returns through higher dividend payments. The ongoing strength in its core businesses, continued investment in renewable and conventional assets, and a secured backlog of $17 billion will likely drive its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and distributable cash flow per share (DCF/share). 

Overall, Enbridge’s diversified cash streams, benefits from the new assets placed into service, revenue escalators, solid secured projects, and high yield makes it a solid passive-income stock to add to your TFSA portfolio. 

Scotiabank

Canadian bank stocks are famous for offering solid dividend payments. For instance, top Canadian banks have been paying regular dividends for over a century. One such stock is Scotiabank (TSX:BNS), which has been paying a regular dividend since 1833. Furthermore, this financial services giant has increased its dividend at a CAGR of 6% between 2011 and 2022. Also, it offers a dividend yield of approximately 5.9% at current levels. 

Scotiabank’s exposure to high-quality banking markets, diversified revenue base, and healthy earnings growth (increased at a CAGR of 5% in the past decade) support its payouts. Moreover, its solid credit quality, strong balance sheet, and operating efficiency cushion its bottom line and payouts. 

Bottom line 

These Canadian companies have been paying and growing their dividends. Moreover, their payouts are resilient and well covered. Also, they offer attractive yields, which makes them an excellent choice for investors seeking regular passive income.

The table shows that a $30K investment ($10K in each stock) via TFSA could generate approximately $408 in tax-free passive income every quarter, or about $102 per month.