Passive Income: How Much to Invest to Make $1,000 Per Month

Canadian investors may want to seek out passive income through stocks like Timbercreek Financial Corp. (TSX:TF) in a turbulent market.

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Foolish readers may be more anxious than usual, as we have witnessed the collapse of Silicon Valley Bank, Signature Bank, and threats to even larger institutions, like Credit Suisse. The United States Federal Reserve and the Bank of Canada (BoC) have both pursued an aggressive rate tightening policy in response to soaring inflation that hit consumers hard in 2022. Those rate hikes have eaten into inflation rates, but now institutions that have gorged on cheap credit and historically low interest rates are being punished. Canadian investors may want to pursue dependable passive income to sidestep this bout of volatility.

Today, I want to discuss how you can look to generate $1,000 per month in passive income. In this hypothetical scenario, we are going to look to mix it up with a Tax-Free Savings Account (TFSA) and a cash account. With this method, a nice chunk of our monthly passive income will be entirely tax free. Let’s jump in!

Here’s the first passive-income vehicle I’d snatch up to reach our goal today

Northwest Healthcare REIT (TSX:NWH.UN) is a Toronto-based real estate investment trust (REIT) that owns and operates a global portfolio of high-quality healthcare real estate. Shares of this REIT have dropped 37% year over year as of close on March 16. The stock has dipped 5.2% so far in 2023.

Investors can expect to see Northwest Healthcare’s fourth-quarter and full-year fiscal 2022 earnings on the morning of March 31, 2023. This REIT closed at $8.98 on March 16. For our hypothetical, we will look to snag 5,250 shares of Northwest in our TFSA for a purchase price of $47,145. The REIT offers a monthly distribution of $0.067 per share. That represents a monster 8.9% yield.

This investment will allow us to generate monthly tax-free passive income of $351.75 with Northwest REIT. That gets us a third of the way towards our four-figure goal.

This monthly dividend stock is perfect for our scenario

Timbercreek Financial (TSX:TF) is a Toronto-based mortgage investment company that provides shorter-duration structured financing solutions to commercial real estate investors across Canada. Canada’s housing sector has been seriously challenged during this rate-tightening push. However, high immigration and low supply should cap a consistently strong national real estate sector. This stock has jumped 8.7% in 2023 as of close on March 16.

Shares of Timbercreek Financial closed at $7.93 on March 16. We can utilize the rest of our TFSA room and snatch up 5,151 shares of Timbercreek for a total price of $40,847.43. Timbercreek offers a monthly distribution of $0.058 per share, which represents a fantastic 8.7% yield. This means we can churn out tax-free monthly passive income of $298.75 with Timbercreek doing some heavy lifting.

One more stock I’d target today to solidify our passive-income portfolio

Sienna Senior Living (TSX:SIA) is the third dividend stock I’d seek out to complete our passive income portfolio. This Markham-based company provides senior living and long-term-care (LTC) services in Canada. Its shares have dipped 2.5% in the year-to-date period.

In fiscal 2022, this company posted total adjusted revenue growth of 10% to $736 million. Meanwhile, average total occupancy in its LTC facilities improved to 88.8%. Sienna stock closed at $10.76 on Thursday, March 16. I’d look to snag 4,500 shares of Sienna for a purchase price of $48,420 in a regular cash account at the time of this writing. Sienna last paid out a monthly dividend of $0.078 per share, representing a 8.7% yield. We can now make monthly passive income of $351 through our cash account.

Bottom line


These investments will allow us to generate tax-free passive income of $650.50. The remaining $351 generated through Sienna stock will be taxable. However, that final purchase gets us over the hump, and you can celebrate with $1,000 in dividends every month.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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