Investors can earn a worry-free passive income by investing in the shares of fundamentally strong Canadian dividend stocks. Moreover, one must leverage the TFSA (Tax-Free Savings Account) to invest in dividend stocks and earn tax-free yields. Notably, capital gains, dividend income, and interest earned in a TFSA are not taxed, making it an excellent vehicle to invest, earn tax-free passive income, and create wealth in the long term.
With this background, let’s look at a few Canadian stocks that offer monthly dividend payments. Further, investing in these stocks through the TFSA can help you make $99 per month tax-free.
NorthWest Healthcare Properties REIT
Investors looking to start a tax-free monthly passive-income stream could consider investing in NorthWest Healthcare Properties REIT (TSX:NWH.UN). Investors should note that REITs (real estate investment trusts) have high dividend payout ratios, which makes them attractive investments for investors seeking passive income.
NorthWest Healthcare owns a defensive portfolio of real estate assets and has a high-quality tenant base of large hospital operators and healthcare practitioners. This adds stability to NorthWest’s financial performance and enables it to boost investors’ returns through regular dividend payouts. Further, as its tenants provide essential services, the demand for its assets remains high.
The firm also benefits from its long lease expiry term (average lease expiry term of 13.5 years) and high occupancy rate of 96%. This adds visibility to its future cash flows. Also, most of its rental income has protection against inflation, allowing it to generate healthy organic growth and same-property net operating income.
NorthWest Healthcare pays a dividend of $0.067 per share a month. This translates into a high yield of 11.98% (based on its closing price of $6.68 on September 11). Further, NorthWest Healthcare stock has witnessed a significant correction over near-term debt concerns, providing an excellent opportunity to buy and hold its stock near the current levels.
Pizza Pizza Royalty
Besides NorthWest Healthcare, investors seeking monthly passive income could consider investing in the shares of Pizza Pizza Royalty (TSX:PZA). It earns royalty income, as it franchises quick-service restaurants through two of its leading brands, including Pizza Pizza restaurants and Pizza 73 restaurants.
What stands out is that the company consistently focuses on enhancing its shareholders’ returns. After retaining reasonable reserves, Pizza Pizza Royalty distributes all of its available cash, making it a compelling stock for passive-income seekers. The company is growing well, reflecting higher traffic, pricing, and a better sales mix. Further, it continues to increase its dividend rapidly since the easing of COVID-led restrictions.
Pizza Pizza Royalty pays a monthly dividend of $0.075 per share, reflecting a high yield of 6.28%.
NorthWest Healthcare REIT and Pizza Pizza Royalty pay monthly dividends and offer compelling yields near the current levels. Further, both these companies focus on enhancing shareholders’ value, making them attractive income stocks.
|Company||Recent Price||Number of Shares||Dividend||Total Payout||Frequency|
|Pizza Pizza Royalty||$14.33||454||$0.075||$34.05||Monthly|
The table above shows that if you invest $6.5K in each of these shares through your TFSA, you can earn about $99 in tax-free passive income every month.