The Tax-Free Savings Account (TFSA) was launched in January 2009. All capital growth and income generated in this registered account is entirely tax free. As the account has seen its cumulative contribution room grow, this has grown into the favourite registered account among Canadians.
Today, I want to discuss how we can earn $400 per month in our TFSA. In this hypothetical, we are going to use $52,000, which still gives us some room to play with as the cumulative room in a TFSA is $88,000 in 2023. Let’s jump in.
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Why this dividend stock is perfect to snag for our TFSA today
Sienna Senior Living (TSX: SIA) is a Markham-based company that provides senior living and long-term-care (LTC) services in Canada. Shares of this dividend stock have dropped 2.1% month over month as of close on Friday, June 23. The stock is still up marginally in the year-to-date period. Investors who want to see more of its recent performance can play with the interactive price chart below.
This company released its first-quarter (Q1) fiscal 2023 earnings on May 11. Same-property net operating income (NOI) increased 9.9% year over year to $34.7 million. Moreover, it reported LTC occupancy of 96.8% in the first quarter of fiscal 2023.
Shares of Sienna Senior Living closed at $11.09 on Friday, June 23. For our hypothetical, we can snatch up 1,500 shares of Sienna in our TFSA for a purchase price of $16,635. This stock offers a monthly dividend of $0.078 per share. That represents a fantastic 8.4% yield. We can now generate monthly passive income of $117 in our TFSA.
Here’s a supercharged REIT that can churn out big passive income!
Northwest Healthcare REIT (TSX:NWH.UN) is a Toronto-based real estate investment trust (REIT) that owns and operates a global portfolio of high-quality healthcare real estate. Shares of Northwest have been battered in June after it announced it pulled out of a real estate deal in the United Kingdom. This REIT looks deeply undervalued in the final week of June.
The stock closed at $6.39 per share on Friday, June 23. In our scenario, we can grab 2,600 shares of Northwest Healthcare REIT for a total price of $16,614. This REIT currently offers a monthly distribution of $0.067 per share, which represents a mammoth 12% yield. The purchase will let us churn out tax-free monthly passive income of $174.20.
One more monthly dividend stock to complete our passive-income TFSA
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 North America and Australia. Its shares have plunged 13% over the past month. That has pushed this dividend stock into negative territory in the year-over-year period.
Shares of TransAlta Renewables closed at $10.99 on June 23. We can snag 1,515 shares of TransAlta for a purchase price of $16,649.85. The stock offers a monthly distribution of $0.078 per share, representing a monster 8.5% yield. We can now generate monthly passive income of $118.17 in our TFSA.
Bottom line
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| SIA | $11.09 | 1,500 | $0.078 | $117 | Monthly |
| NWH.UN | $6.39 | 2,600 | $0.067 | $174.20 | Monthly |
| RNW | $10.99 | 1,515 | $0.078 | $118.17 | Monthly |
These investments in our TFSA will allow us to generate monthly passive income of $409.37. That works out to annual passive income of $4,912.44.
