TFSA: Get Over $500 Each Month With These 3 Dividend Payers

Boost your passive income with these three monthly paying dividend stocks.

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Given the uncertain global economy and inflationary environment, having multiple sources of income is necessary. One of the cheapest ways to earn a secondary or passive income is by investing in high-yielding, monthly paying dividend stocks. Meanwhile, by investing through their TFSA (Tax-Free Savings Account), one can save taxes on their investment earnings (capital gains and dividends).

The cumulative TFSA contribution room for a Canadian who was 18 years and above in 2009 would be $88,000. Meanwhile, if you invest the stated amount equally among the following three monthly paying dividend stocks, you can earn $591/month through dividends.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
NWH7.8737270.067249Monthly
RNW12.723090.078180Monthly
EXE7.2440510.040162Monthly

Northwest Healthcare Properties REIT

NorthWest Healthcare Properties REIT (TSX:NWH.UN) owns and operates 233 healthcare properties, with a total gross leasable area of 18.64 million square feet. The company enjoys a high occupancy rate due to its highly defensive healthcare portfolio, long-term lease agreements, and government-backed diversified tenant base. Its inflation-indexed rent protects its financials against rising prices.

Meanwhile, the rising interest rates and a temporary increase in leverage drove NorthWest Healthcare’s interest expenses, thus dragging its AFFO (adjusted fund from operations) and stock price down. However, the company’s management has taken necessary deleveraging initiatives. It has identified $330 million worth of non-core assets, which it plans to sell by the end of the third quarter. It is working on lowering its stake in the United States and United Kingdom joint ventures. These initiatives together can generate $550-$600 million of net proceeds, which the company plans to utilize to pay off high-interest-bearing loans.

Further, with the availability of $4.6 billion fee-bearing capital, NorthWest Healthcare plans to progress with its new investment opportunities while remaining disciplined. Amid all these initiatives, the company’s management expects its AFFO to grow by 20% this year, thus making its future dividend payouts safer. The company currently pays a monthly dividend of $0.06667/share, with its forward yield at an impressive 10.17%.

TransAlta Renewables

With a dividend yield of 7.4%, TransAlta Renewables (TSX:RNW) is my second pick. The company operates or has an economic interest in 48 power-producing facilities across Canada, the United States, and Australia, with a total production capacity of around three gigawatts. Meanwhile, the company has signed long-term PPA (power-purchase agreements) to sell the power produced from its facilities, with the weighted average remaining life of these contracts at 11 years. So, the company’s financials are primarily stable.

Meanwhile, the rehabilitation of the 13 wind facilities at Kent Hills is underway, and the management expects to complete it in the second half of this year. The company hopes to begin the commercial operation of the Northern Goldfields facility and complete the expansion of its Mount Keith project this quarter. Further, it has several projects in advanced and early development stages, with a total production capacity of 780 megawatts. So, considering its healthy growth prospects and stable cash flows, I believe TransAlta Renewables is in good shape to continue paying dividends at attractive rates.

Extendicare

With the rising aging population, the demand for care and services to grow in the coming years. So, I have selected Extendicare (TSX:EXE) as my final pick. The company offers care and services to senior citizens across Canada under various brands. Meanwhile, the company posted a solid first-quarter performance earlier this month, with its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growing by 35% to $31 million.

A decline in COVID-19 cases, home health volume growth, and a higher occupancy rate at its LTC (long-term care) drove its financials. Compared to the previous year’s quarter, its home healthcare volumes grew by 6.1%, while its LTC occupancy increased by 4.3%. Further, the company expects to start the construction of a new 256-bed LTC home and a replacement for a 172-bed Class C home in Ontario this quarter.

Considering its improving financials and healthy growth prospects, I believe the company’s future payouts are safe. Meanwhile, it currently offers a forward yield of 6.63%, making it an attractive buy for income-seeking investors.

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 Rajiv Nanjapla 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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