The Tax-Free Savings Account (TFSA) often garners attention as an effective vehicle for capital growth. There is no doubt that the TFSA is a terrific option for investors who are pursuing a growth-oriented approach. If you strike it big on your growth equities, you will not have to pay tax on those gains. However, the TFSA is also a great pick for investors who want to generate big income.
Today, I want to discuss how you can use the TFSA to earn $300 per month in 2023 and beyond. In this hypothetical, we are going to utilize $48,000 of our TFSA room. That means we still have nearly half of our room still available, at least for investors who have been eligible to contribute since 2009. Let’s jump in.
Why I’m targeting this REIT to churn out income in our TFSA
SmartCentres REIT (TSX:SRU.UN) is a Toronto-based real estate investment trust (REIT) that features over 180 strategically placed properties across Canada. Shares of this REIT have suffered a steady decline in the year-over-year period. The stock closed at $24.39 on Friday, August 18.
This REIT released its second quarter (Q2) fiscal 2023 earnings on August 9. The company reported that shopping centre leasing activity strengthened compared to Q1 2023. It reported an industry-leading committed occupancy rate of 98.2%. Adjusted funds from operations (AFFO) rose to $87.8 million in Q2 compared to $81.4 million in the previous year.
We can snatch up 700 shares of SmartCentres REIT for a purchase price of $17,073. This REIT currently offers a monthly distribution of $0.154 per share. That represents a tasty 7.5% yield. We can now generate monthly passive income of $107.80 in our TFSA.
Here’s an energy stock that will make income investors happy
Freehold Royalties (TSX:FRU) is a Calgary-based company that 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 jumped marginally in the month-over-month period. The energy stock has dropped 4.8% so far in 2023.
Shares of Freehold Royalties closed at $14.35 on August 18. For our hypothetical, we can purchase 1,150 shares of Freehold for a total price of $16,502.50. This stock last paid out a monthly dividend of $0.09 per share, which represents another great 7.5% yield. The investment means we can churn out tax-free passive income of $103.50 every month.
One more REIT I’d snatch up for our TFSA today
Artis REIT (TSX:AX.UN) is the third equity I’d target to round out our passive income TFSA. This Winnipeg-based REIT owns and operates properties in the industrial, office, and retail sectors in Canada and the United States. Its shares have plunged sharply compared to the previous year.
This REIT closed at $6.89 on Friday, August 18. For our final purchase, we can snag 2,093 shares of Artis REIT for a total of $14.420.77. The REIT currently offers a monthly dividend of $0.05 per share, representing a superb 8.7% yield. We can now make monthly passive income of $104.65 in our TFSA.
Conclusion
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| SRU.UN | $24.39 | 700 | $0.154 | $107.80 | Monthly |
| FRU | $14.35 | 1,150 | $0.09 | $103.50 | Monthly |
| AX.UN | $6.89 | 2,093 | $0.05 | $104.65 | Monthly |
These investments will allow us to generate monthly passive income of $315.95 in our TFSA. That means we will also be able to rake in annual passive income of $3,791.40 entirely tax free.
