There are likely many Canadians who continue to put cash aside in their Tax-Free Savings Account (TFSA) but do nothing with it. Right now may not seem like the best time to do this, with the market down and a recession still looming.
However, if you’re looking for long-term passive income, it’s always a good time to invest. So, if you have $50,000 in your TFSA just sitting there, this is where I would put it for monthly passive income. Further, let’s look at what that $50,000 could turn into over the next decade.
Slate Grocery
First off, let’s look at a solid real estate investment trust (REIT) that remains in value territory. Slate Grocery REIT (TSX: SGR.UN) offers a dividend that comes out every month, with a yield at 7.94%. And again, it’s in value territory, trading at just 5.17 times earnings.
Slate stock is a strong option, as it invests in the essential line of grocery chains across the United States. Occupancy remained stable during the pandemic and remains so today. Plus, it continues to expand through acquisitions.
Shares are up 4.41% in the last year and 140% in the last decade for a compound annual growth rate (CAGR) of 10.4%. Here’s what a $16,667 investment would bring in with passive income.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (ANNUAL) | TOTAL PAYOUT (ANNUAL) | FREQUENCY |
| SGR.UN | $14.85 | 1,122 | $1.17 | $1,312.74 | Monthly |
TD Bank
The Big Six banks are some of the best options out there for passive income. This is because they have provisions for loan losses, allowing them to recover quickly from downturns. This allows them not only to continue their dividends but increase them.
This was the case for Toronto-Dominion Bank (TSX: TD), true, but it’s more than that. TD stock continues to grow, as the bank expands in practically every area of the business. TD stock has multiple loan options for Canadian clients, as well as credit card partnerships, wealth and commercial management, and it is one of the top 10 banks in the United States.
Shares of TD stock are down 9% in the last year as of writing but up 207% in the last decade for a CAGR of 11.87%. This is what you would get from another $16,667 investment for passive income from a 4.24% dividend yield.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (ANNUAL) | TOTAL PAYOUT (ANNUAL) | FREQUENCY |
| TD | $88.68 | 188 | $3.84 | $721.92 | Quarterly |
iShares Canadian Select Dividend Index ETF
There are some nervous investors out there, so if you’re worried and want passive income, perhaps just consider this option. However, I would still recommend the other two along with this as a solid base for a passive-income portfolio.
iShares Canadian Select Dividend Index ETF (TSX: XDV) offers a 4.16% dividend yield as of writing, with the investment in Canadian equities across a long line of industries. So, while shares might be down 5% in the last year, know that you’re investing in strong passive income from companies that aren’t going anywhere.
Those shares are also up 100% in the last decade for a CAGR of 7.15%! And that’s pretty incredible from an exchange-traded fund (ETF). So, let’s see what another $16,667 would get you.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (ANNUAL) | TOTAL PAYOUT (ANNUAL) | FREQUENCY |
| XDV | $28.78 | 579 | $1.20 | $694.80 | Monthly |
Foolish takeaway
Investing in these companies would bring in passive income of $2,729.46 annually, or $227.46 per month. If you reinvested those dividends in your TFSA for the next decade or more based on these averages, investors could create enough passive income to allow them to surf through any future downturn.
