Buy 3,500 Shares in This Dividend Stock for $233/Month in TAX-FREE Passive Income

I’m still looking to make big passive income with dividend stocks like Northwest Healthcare REIT (TSX:NWH.UN) in 2023 and beyond.

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Canadians can earn passive income in many ways. However, many of these strategies are not practical for the average investor. For example, one must be a homeowner to generate passive income through rent. Instead, I want to explore how we can churn out sizable passive income in a Tax-Free Savings Account (TFSA). Moreover, I want to snatch up a top monthly dividend stock that will help us reach our goals. Let’s jump in.

Why Canadians should look to build passive income in the middle of 2023

The S&P/TSX Composite Index climbed 120 points to open the week on Monday, May 15. However, Canadian stocks have broadly suffered from turbulence in late April and the first half of May. That may spur some investors to contemplate a passive-income strategy. Indeed, when we cannot rely on capital growth it checks that Canadian investors will be eager to turn to a strategy that promises income here and now. That passive-income generation is made all the sweeter when we can avoid paying any taxes on our dividends in a TFSA.

Here’s why this REIT is one of my favourite dividend stocks right now!

Northwest Healthcare REIT (TSX:NWH.UN) is the dividend stock I’m counting on in our hypothetical passive-income portfolio. This real estate investment trust (REIT) owns and operates a global portfolio of high-quality healthcare real estate. Shares of this REIT have dropped 4.4% month over month as of close on May 15. Meanwhile, the stock has plunged 15% so far in 2023.

This company released its first-quarter (Q1) fiscal 2023 earnings on May 12. Northwest delivered revenue growth of 12% year on year to $135 million. Meanwhile, same property net operating income (NOI) increased by 4.4% as it was bolstered by annual rent indexation. Moreover, total assets under management (AUM) rose 13% to $10.8 billion.

The number of Northwest Healthcare properties rose to 233 as of March 31, 2023 — up from 202 properties it possessed in the previous year. The company’s occupancy remained strong at 97%.

Shares of this dividend stock currently possess a solid price-to-earnings (P/E) ratio of 29. Northwest’s value is encouraging right now, but we are more interested in its income offering at the time of this writing. Let’s sink our teeth into our passive-income scenario.

How you can churn out tax-free passive income with this dividend stock…


On May 15, 2023, Northwest announced a monthly distribution of $0.06667 per unit. That represents a monster 10% yield.

For our passive-income portfolio, we will look to utilize under $30,000 in our TFSA. That still gives us plenty of room to maneuver in other directions, as the cumulative contribution room sits at $88,000. Northwest Healthcare REIT closed at $7.97 on Monday, May 15. We can snatch up 3,500 shares of this dividend stock for a purchase price of $27,895. This investment will allow us to churn out tax-free passive income of $233.34 per month. That works out to an annual passive income payment of $2,800 going forward.

Please note that we at the Fool prefer a more diversified portfolio and don’t recommend putting such a large sum into only one stock. Instead, we suggest you mix and match a diverse group of dividend-paying stocks to achieve your target yield.

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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