TFSA Passive Income: Make $203/Month Tax Free

Investments in fundamentally strong Canadian dividend stocks via TFSA (Tax-Free Savings Account) can help supplement your tax-free passive income. Thankfully, several Canadian stocks offer reliable payouts. However, here I’ll focus only on the shares of the companies that provide monthly payouts. 

With this backdrop, let’s delve into three stocks that offer monthly payouts and can help you earn over $203 per month. Interestingly, these dividend stocks also carry a high yield. 

SmartCentres Real Estate

Investors could consider investing in SmartCentres Real Estate Investment Trust (TSX:SRU.UN) for solid tax-free dividend income. SmartCentres is Canada’s top fully integrated real estate investment trust. It operates an income-producing portfolio of 188 properties spread across 34.8 million square feet. 

It pays a monthly dividend of $0.154 a share, reflecting a high yield of 7.3%. Meanwhile, its payout ratio remains high, above 90%. 

SmartCentres’s high-quality rental space, solid tenant base of large retailers and essential services providers, and industry-leading occupancy rate of 98% position it well to deliver stable cash flows that support its payouts. Further, the high proportion of fixed-rate debt makes it relatively immune to rising higher interest rates. Overall, SmartCentres is an ideal investment to earn a reliable, monthly, tax-free income.

NorthWest Healthcare Properties 

NorthWest Healthcare Properties (TSX:NWH.UN) is another compelling bet in the real estate investment trust (REIT) space. It offers a monthly dividend of $0.067 per share, reflecting a yield of over 11%. The firm owns a defensive portfolio of healthcare-focused real estate assets spread across multiple geographies. In addition, most of its tenants include hospital operators and rehabilitation clinics supported by the government. 

Impressively, its sports a high occupancy level of 97%. Furthermore, its leases have a long expiry term of over 13 years, which adds stability to its cash flows and helps it to earn strong same-property net operating income. Also, the majority of its rents have protection against inflation that organically supports its growth and dividend payouts. 

NorthWest’s financial performance and stock have taken a hit on account of higher interest rates and temporarily elevated leverage. However, the firm is taking steps to reduce its debt balance and is selling non-core assets, which is positive. Owing to the pullback, the stock is trading cheap and offers a high yield, which makes it an attractive investment near the current levels to earn tax-free monthly income. 

Pizza Pizza Royalty 

The final stock on this list is Pizza Pizza Royalty (TSX:PZA). The company franchises quick-service restaurants and earns royalty income tied to the sales of its two leading brands, including Pizza Pizza restaurants and Pizza 73 restaurants. 

It pays a monthly dividend of $0.075 and offers an attractive yield of around 5.9% near the current levels. 

Pizza Pizza Royalty focuses on enhancing its shareholders’ returns and distributes all of its available cash, retaining reasonable reserves. The company is benefiting from the economic reopening, which is driving traffic and enabling the company to increase its dividend significantly over the past year. 

Earn over $203/month 

SmartCentres, NorthWest, and Pizza Pizza Royalty are solid monthly paying dividend stocks to earn tax-free income. Besides monthly payouts, these stocks offer high yields near the current levels.

The table above shows that if you invest $10K in each of these shares, you can earn over $203 in tax-free passive income every month.