TFSA Passive Income: Make $316/Month

Investors can look to generate passive income in their TFSA with monthly dividend stocks like TransAlta Renewables Inc. (TSX:RNW).

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The Tax-Free Savings Account (TFSA) was introduced as a registered account to Canadians all the way back in January 2009. Since its inception, the TFSA has grown into the most popular registered account among domestic investors. This is likely due to its flexibility and the opportunity to gobble up tax-free gains in several ways.

Today, I want to discuss how you can churn out over $300 per month if we pursue an income-oriented strategy in our TFSA. In this hypothetical, we are going to be playing with $50,000. Investors should take note that this is a hypothetical to illustrate how much we can earn, but in a legitimate portfolio you should seek much more diversification to protect yourself.

This green energy stock offers big passive income

TransAlta Renewables (TSX:RNW) is the first dividend stock I’d look to snatch up for our passive-income portfolio. This Calgary-based company owns, develops, and operates renewable and natural gas power-generation facilities and other infrastructure assets in Canada, the United States, and Australia. Shares of this dividend stock have jumped 2.7% month over month as of close on May 29. The stock is up 14% so far in 2023.

Shares of TransAlta closed at $13.07 on Monday, May 29. In our hypothetical, we can snatch up 1,250 shares of TransAlta for a purchase price of $16,337.50. This dividend stock offers a monthly distribution of $0.078 per share. That represents a very tasty 7.1% yield. We can now generate monthly passive income of $97.50 in our TFSA going forward.

Here’s another monthly dividend stock to stash in your TFSA

Bird Construction (TSX:BDT) is a Mississauga-based company that provides construction services in Canada. Its shares have moved up marginally over the past month. Moreover, the stock has climbed 7.1% in the year-to-date period.

In the first quarter (Q1) of 2023, this company reported construction revenue of $536 million — up from $475 million in Q1 fiscal 2022. This stock possesses a favourable price-to-earnings (P/E) ratio of 9.5 and an immaculate balance sheet.

Bird Construction stock closed at $8.68 on Monday, May 29. For our TFSA, we can purchase 1,850 shares of Bird Construction for a grand total of $16,058. This stock offers a monthly dividend of $0.036 per share, which represents a solid 4.9% yield. That means we can churn out monthly passive income of $66.60 in our TFSA.

One REIT that can help round out your passive-income portfolio

Northwest Healthcare REIT (TSX:NWH.UN) is the third stock I’d look to add to our income-focused TFSA in the final days of May. This real estate investment trust (REIT) owns and operates a portfolio of high-quality healthcare real estate around the world. The REIT jumped 1.45% in yesterday’s trading session.

This REIT closed at $7.71 as the closing bell rang yesterday. In our hypothetical, we can purchase 2,280 shares of Northwest Healthcare for a purchase price of $17,578.80. The stock offers a monthly dividend of $0.067 per share, representing a monster 10% yield. This investment means we will be able to generate monthly passive income of $152.76 in our TFSA.

Bottom line


These investments will allow us to churn out monthly passive income of $316.86 in our TFSA. That works out to annual tax-free passive income of $3,802.32.

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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