Canadians have been hammered by soaring inflation and a series of aggressive interest rate hikes from the Bank of Canada (BoC). The cost of living was already high coming into this new decade. Now, many Canadians are struggling to pay their bills. One way to supplement your income in 2023 is to seek out passive income. Indeed, you do not need to be a best-selling novelist, a famous YouTuber, or even a homeowner to generate passive income. All you need is some cash that you have saved and the eagerness to fire up a passive income portfolio.
Today, I want to explore how we can accomplish this by pushing for income in a Tax-Free Savings Account (TFSA). For this hypothetical, we will be working with $12,000 as our principle. Let’s jump in.
This green energy stock is a great kick off for your passive-income portfolio
TransAlta Renewables (TSX: RNW) is a Calgary-based company that 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 green energy stock have plunged 8.8% month over month as of close on Monday, June 19. The stock is still up 2.8% so far in 2023.
This company released its first-quarter fiscal 2023 earnings on May 5. Earnings before income taxes rose to $53 million compared to $49 million in the first quarter of fiscal 2022. Moreover, net earnings per diluted share were reported at $0.17 — up from $0.15 in the previous year. Its shares are trading in favourable value territory compared to its industry peers.
Shares of TransAlta closed at $11.69 on Monday, June 19. We can snatch up 350 shares of TransAlta for a purchase price of $4,091.50. The stock offers a monthly distribution of $0.078 per share. That represents a superb 8% yield. This purchase allows us to generate monthly passive income of $27.30 from here on out.
Here’s a high-yield REIT you can trust for the long term
Chartwell Retirement REIT (TSX: CSH.UN) is a Mississauga-based real estate investment trust (REIT) that indirectly owns and operates a complete range of seniors housing communities. Canada’s aging population means that long-term-care (LTC) facilities and retirement homes are going to be significantly more in demand in the years and decades ahead. This is a REIT to target in this arena.
This REIT closed at $9.23 on June 19. For our hypothetical, we can purchase 400 shares of Chartwell Retirement REIT for a total of $3,692. The REIT last paid out a monthly dividend of $0.051 per share, which represents a tasty 6.6% yield. That means we can now churn out monthly passive income of $20.40 going forward.
One more monthly dividend stock that will help us build passive income in 2023
Freehold Royalties (TSX: FRU) is the third dividend stock I’d snatch up to round out our passive-income portfolio. This Calgary-based company is engaged in the acquisition and management of royalty interest in the crude oil, natural gas, natural gas liquids, and potash properties in Western Canada and the United States. Its shares have dropped 11% in the year-to-date period. Freehold currently possesses an attractive price-to-earnings (P/E) ratio of 10.
Shares of Freehold Royalties closed at $13.41 on June 19. For our final purchase, we can snatch up 314 shares for a total of $4,210.74. Freehold offers a monthly distribution of $0.09 per share, representing a monster 8% yield. This means we can now generate monthly passive income of $28.26.
Bottom line
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| RNW | $11.69 | 350 | $0.078 | $27.30 | Monthly |
| CSH.UN | $9.23 | 400 | $0.051 | $20.40 | Monthly |
| FRU | $13.41 | 314 | $0.09 | $28.26 | Monthly |
These investments will allow us to generate tax-free passive income of $75.96. That works out to annual passive income of $911.52 on a $12,000 initial investment. This can provide a much-needed boost to crunched Canadians through 2023 and beyond.
