Here’s How You Could Earn $100 Tax-Free This Month

TFSA (Tax-Free Savings Account) investors can use the benefits of this registered account to earn a stable stream of passive income each month. For instance, Canadian investors can identify monthly paying dividend stocks and REITs (real-estate investment trusts) that offer a tasty yield to shareholders and hold them in a TFSA.

Typically, any returns generated in the TFSA are exempt from Canada Revenue Agency taxes, making it attractive to growth and income-seeking investors.

Here are two TSX stocks you can buy and earn $100 in passive income this month and hopefully for years.  

Exchange Income stock

A mid-cap TSX stock, Exchange Income (TSX: EIF) is valued at a market cap of $2.3 billion. The Canadian dividend stock currently offers shareholders a tasty yield of 5.2% as it trades 13% below all-time highs. Despite the recent pullback in share prices, EIF stock has returned 300% to investors in the past decade, easily outpacing the broader markets.

Exchange Income operates strategic business units that offer different products and services, allowing the company to diversify its revenue base. Moreover, Exchange Income has focused on highly accretive acquisitions over the years to boost revenue growth and profit margins.

Its stable cash flows allow Exchange Income to pay shareholders a monthly dividend of $0.21 per share. Since 2004, it has paid shareholders over $750 million in cash dividends, and these payouts have risen annually by 5% in the past 19 years.

Priced at 14.4 times forward earnings, EIF stock is really cheap, given its high dividend yield and five-year annual earnings growth estimates of 11.5%.

Analysts tracking the TSX stock expect shares to surge by 40% in the next 12 months.

Slate Grocery REIT

Among the most popular dividend stocks on the TSX, Slate Grocery (TSX: SGR.UN) offers you a yield of 9.2%. An owner and operator of grocery-anchored real estate, Slate Grocery has $2.4 billion in real estate infrastructure in major markets south of the border.

Its resilient portfolio allows Slate Grocery to generate cash flows across market cycles, making it a recession-resistant company.

In Q2 2023, Slate Grocery achieved a record 1 million square feet of total leasing at a 7.1% spread compared to average in-place rents. Its non-option renewal spreads were 10.9% higher than average in-place rent.

The REIT giant ended Q2 with an occupancy rate of 93.9%, up 70 basis points compared to the March quarter. Slate Grocery stated, “Our leasing momentum, coupled with continued rental rate growth, has further strengthened our cash flows.”

After adjusting for completed redevelopments, same-property net operating income continues to trend higher, rising 2.7% compared to the year-ago period.

Priced at 12 times forward earnings, Slate Grocery stock trades at a discount of 20% to consensus price target estimates. After adjusting for its high dividend payout, total returns may be closer to 30% in the next 12 months.

The Foolish takeaway

For investors to earn $100 in monthly dividends from the two dividend stocks, you would have to allocate $16,667 equally in these two companies. If the TSX stocks increase dividends by 7% annually, your payout should double in the next 10 years.