The S&P/TSX Composite Index plunged 236 points on Tuesday, April 25. Some of the worst-performing sectors included battery metals, base metals, energy, and health care. Indeed, the only sector that finished the day in the black was the S&P/TSX Capped Utilities Index. The Canadian market has had a strong start to the spring season, but experts continue to warn of the possibility of a domestic recession. Now may be a good time to pivot to a passive-income strategy.
Today, I want to discuss how you can look to make $231 in tax-free passive income every month. Let’s jump in.
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How to make the best of your passive-income portfolio in 2023
In a regular cash account, passive income is taxable. Investors should always do what they can to sidestep tax payments by using registered investment accounts. For this hypothetical, we are going to be using the Tax-Free Savings Account (TFSA). This will allow for maximum flexibility in 2023 and beyond. Moreover, it will allow us to generate passive income that will be entirely tax free.
For this scenario, we are going to start off with $30,000 as a base in our TFSA. That will enable us to make a few hundred in monthly income going forward.
Two passive-income stocks that offer monthly payouts
Timbercreek Financial (TSX: TF) is a Toronto-based mortgage investment company that provides shorter-duration structured financing solutions to commercial real estate investors in Canada. Its shares have dropped marginally month over month as of close on April 25. The stock is still up 9.7% so far in 2023.
Shares of Timbercreek closed at $8.00 per share on Tuesday, April 25. For our hypothetical, we can snatch up 1,850 shares of Timbercreek for a purchase price of $14,800. This dividend stock offers a monthly distribution of $0.058 per share. That represents a very tasty 8.6% yield. This investment will allow us to generate tax-free, monthly passive income of $107.30 going forward.
Northwest Healthcare REIT (TSX:NWH.UN) is the second equity I’d target for our passive-income portfolio. This Toronto-based real estate investment trust (REIT) owns and operates a global portfolio of high-quality healthcare real estate around the world. Shares of this REIT have dropped 13% so far in 2023. The stock has plunged 38% over the previous year.
This REIT closed at $8.19 per share on April 25. We can purchase 1,855 shares of Northwest Healthcare REIT for a grand total of $15,192.45. Moreover, this REIT offers a monthly distribution of $0.067 per share, which represents a monster 9.2% yield. That will allow us to make monthly passive income of $124.28 with this investment.
Conclusion
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| TF | $8.00 | 1,850 | $0.058 | $107.30 | Monthly |
| NWH.UN | $8.19 | 1,855 | $0.067 | $124.28 | Monthly |
These investments will allow us to generate monthly passive income of $231.58 in our hypothetical TFSA. That is a nice chunk of change to go forward with for the rest of 2023.
