TFSA: How to Invest for $250 Monthly in Retirement

Finding that right mix of investments can be a frustrating task for new investors. More so is the task of not only picking those right investments, but also choosing wisely to generate a healthy income. Fortunately, the market gives us plenty of options to consider to generate a healthy $250 monthly in retirement.

Here’s a look at some of the stocks to make that happen.

Stock #1: RioCan Real Estate

With interest rates still well into the stratosphere, prospective investors looking to acquire a rental property are left with rising costs. This is where the appeal of RioCan Real Estate (TSX: REI.UN) comes into play.

RioCan is one of the largest real estate investment trusts (REITs) in Canada. The company’s portfolio is centered on Canada’s major metro area, numbering approximately 200 sites. Historically, RioCan’s focus has been around commercial retail, but that focus has shifted in recent years to mixed-use residential properties.

Those mixed-use properties are situated in high-demand areas along transit lines within Canada’s major metro areas. Even better, the residential properties are located above several floors of retail, giving it the best of both worlds.

What makes RioCan unique, particularly when compared with owning a rental property, is the diversified nature and lower upfront cost. There’s no need for a down payment, mortgage, or need to worry about taxes. In fact, purchasing the investment as part of a Tax-Free Savings Account (TFSA) will allow those earnings to grow tax free.

Speaking of earnings, RioCan offers investors a monthly distribution. The current yield works out to a tasty 5.06%. This means that investors with $30,000 to invest can expect to generate a monthly income of $125. That’s halfway to the $250 monthly in retirement income mentioned above.

Stock #2: Renewable energy

Renewable energy is one of the biggest long-term opportunities on the market. Traditional utilities are transitioning towards renewables at significant expense, led by a colossal shift on the market.

For renewable energy companies like TransAlta Renewables (TSX: RNW), that shift has already occurred, meaning that the company can invest in growth and pay out a juicy dividend.

For those that are unfamiliar with the stock, TransAlta operates a portfolio of facilities located across Canada, the U.S., and Australia. Those facilities include multiple renewable energy types, such as solar, wind, and hydro.

What some investors may not realize is that despite the renewable nature of TransAlta’s operation, it adheres to the stable model that its fossil fuel-burning peers still follow. In other words, the facilities are bound by very long-term, regulated contracts to provide utility service. For as long as that service is provided, TransAlta generates a stable and recurring revenue stream.

That stable revenue stream then allows the company to pay out its monthly dividend. As of the time of writing, the yield on that dividend is a whopping 7.51%, handily making it one of the better-paying stocks on the market.

By way of example, a $25,000 investment in TransAlta will generate a monthly income of $156 each month.

$250 monthly in retirement (or more) is possible

No stock is without risk, and that includes both TransAlta and RioCan. Fortunately, both cater to unique segments of the market and boast some defensive appeal. Investors looking to generate $250 monthly in retirement can easily achieve that by investing in both stocks.

Even better, investors that are not yet ready to draw on that income can purchase the stocks now and let them grow untouched as part of your TFSA for a decade or longer.