TFSA Passive Income: Earn $111/Month

The fundamentally strong Canadian dividend stocks can help investors earn steady passive income in all market conditions. Further, one can leverage the TFSA (Tax-Free Savings Account) to earn tax-free dividends. 

Thankfully, the TSX has several stocks that have been consistently paying and growing their dividend payments, regardless of the market conditions, which makes them an attractive investment to earn worry-free passive income. Against this backdrop, the following are the dependable stocks to earn tax-free passive income. 

Enbridge 

Enbridge (TSX:ENB) is a reliable stock for TFSA investors to earn regular passive income. The company owns high-quality energy infrastructure assets and transports crude oil and gas. In addition, it has ownership interests in renewable energy facilities. 

Thanks to its well-established business and high-quality asset base, this large-cap company consistently generates solid distributable cash flows (DCF). This has enabled the company to pay a regular dividend for 68 years. Furthermore, Enbridge increased the dividend at an average annualized growth rate of 10% in the past 28 years. 

The resiliency of its payouts is reflected in its stellar dividend payments and growth history. It’s worth highlighting that the company has even increased its dividend during the pandemic when several energy companies suspended and lowered their payouts. 

Looking ahead, Enbridge’s solid asset base, high utilization rate, and continued investments in conventional assets and renewable energy sources position it well to deliver substantial distributable cash flows and offer higher dividend payments. Further, long-term contracts, regulated cost-of-service tolling frameworks, power-purchase agreements, and low-risk commercial arrangements will add stability to its payouts. 

Overall, its extensive midstream assets, focus on low capital intensity growth projects, and a target payout ratio of 60-70% of DCF make it a must-have income stock. Further, Enbridge offers an attractive dividend yield of 7.30%. 

SmartCentres

TFSA investors could invest in high-quality REITS (real estate investment trusts). REITs are famous for their higher payouts, which makes them an attractive investment to earn tax-free passive income. Among top REITs, investors could invest in SmartCentres (TSX:SRU.UN) for its solid payouts and high yield. 

SmartCentres is Canada’s leading fully integrated REIT with an extensive portfolio of income-producing properties like retail and office space. The REIT benefits from its high and industry-leading occupancy level of 98%. Further, its high-quality tenant base (including essential services providers like large and creditworthy retailers) adds stability to its cash flows and positions it well to enhance its shareholders’ returns. 

The REIT will likely deliver solid cash flows on the back of its high occupancy rate. Furthermore, SmartCentres’s debt is mostly fixed rate, which makes it less susceptible to the high interest rate environment. 

SmartCentres REIT offers monthly payouts and has an attractive yield of f 7.53% (based on its closing price on July 14). 

Earn $111/month in passive income

These companies have a resilient business model and solid dividend-payout history. Further, their strong fundamentals and ability to grow earnings and cash flows in all market conditions position them well to enhance their shareholders’ returns via higher dividend payouts in the coming years. Also, their well-covered payouts and high dividend yields make these stocks attractive investments to earn worry-free passive income. 

The table shows that if you invest about $9K each in shares of Enbridge and SmartCentres, you can earn about $111 in tax-free dividend income every month.