Retirement Hack: How to Make $500/Month TAX FREE on Your Couch!

Canadians in retirement can alleviate stress and make $500/month in their TFSA with top dividend stocks like Extendicare Inc. (TSX:EXE).

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The S&P/TSX Composite Index shed 117 points on Monday, August 14. Investors may have reacted negatively to news that Canada was set to post increased inflation for the first time in nearly a year. This choppy environment can be a headache for Canadians who have already reached retirement.

Today, I want to discuss how retirees can generate over $500 each month in their Tax-Free Savings Account (TFSA). That means you can gobble up fantastic monthly income entirely tax-free from the comfort of your living room. In this hypothetical, we are going to be utilizing $65,000 in TFSA room. Let’s dive in.

Here’s a monster monthly dividend stock that can help you in retirement

Timbercreek Financial (TSX:TF) is the first dividend stock I’d suggest for our retirement hack today. This Toronto-based mortgage investment company provides shorter-duration structured financing solutions to commercial real estate investors in Canada. Shares of Timbercreek have dropped marginally month over month as of close on August 14. The stock is still up 2.1% so far in 2023.

Beyond its income, retirees should also be attracted to Timbercreek’s value. This dividend stock currently possesses an attractive price-to-earnings ratio of 9.9. The stock closed at $7.45 on Monday, August 14. For our hypothetical, we can snatch up 3,355 shares of Timbercreek for a purchase price of $24,994.75. This stock offers a monthly distribution of $0.058 per share. That represents a monster 9.2% yield. We can now generate tax-free monthly passive income of $194.59 going forward.

This high-yield REIT offers massive monthly income right now

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. Its shares plunged 6.94% on Monday, August 14. That wiped out many of the gains that Northwest had achieve in the middle of July. Regardless, I’m still looking to target this high-yield REIT.

The REIT closed at $6.70 per share on Monday, August 14. Retirees can look to gobble up 3,000 shares of Northwest Healthcare REIT for a total price of $20,100 in our TFSA. This dividend stock offers a monthly distribution of $0.067 per share, which represents a superb 11% yield. That means we can count on monthly passive income of $201 in our TFSA.

One more income-yielding stock I’d target for our retirement portfolio

Extendicare (TSX:EXE) is the third and final dividend stock I’d suggest retirees target for our hypothetical TFSA. This Markham-based company provides care and services for seniors in Canada through its subsidiaries. Shares of Extendicare have dropped 7.1% month over month. The stock is still up 7.5% in the year-to-date period.

Shares of this dividend stock closed at $7.02 per share on August 14. We can snag 2,818 shares of Extendicare in our TFSA for a purchase price of $19,782.36. Extendicare offers a monthly dividend of $0.04 per share, representing a very tasty 6.8% yield. That means we can gobble up monthly passive income of $112.72 in the months ahead.

Bottom line

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
TF$7.453,355$0.058$194.59Monthly
NWH.UN$6.703,000$0.067$201Monthly
EXE$7.022,818$0.04$112.72Monthly

These investments will allow our retirement-focused TFSA to generate monthly passive income of $508.31. That should help soothe anxieties over the state of Canada’s economy in 2023 and beyond.

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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