Passive Income: How to Make $120 Per Month Tax-Free

Here’s a great Canadian dividend stock that can help you easily earn reliable monthly passive income for years to come.

If you want to create a reliable source of tax-free monthly passive income in Canada, you may want to try investing in some quality TSX dividend stocks from your TFSA (Tax-Free Savings Account). Besides yielding passive income, dividend stocks can also help you keep your risk profile low, as most dividend-paying businesses have strong fundamentals to support long-term financial growth.

In this article, I’ll highlight one of the best Canadian dividend stocks you can add to your TFSA today to start earning $120 in passive income each month.

One of the best Canadian monthly dividend stocks to buy now

Before selecting a dividend stock to invest in, you must carefully analyze its long-term growth potential and demand outlook. Picking a stock with strong underlying fundamentals can minimize your risks further and yield healthy returns on your investments.

Keeping that in mind, Mullen Group (TSX: MTL) could be a trustworthy Canadian dividend stock to buy right now. This Okotoks-based company provides a range of logistics and warehousing solutions to its customers, primarily in Canada and the United States.

It currently has a market cap of $ 1.2 billion as MTL stock trades at $13.77 per share. The stock has seen a downside correction of 5.4% in 2023 after rallying by more than 25% last year. At the current market price, Mullen Group offers an attractive 5.2% annualized dividend yield and distributes its dividend payouts each month.

What makes it a reliable monthly dividend stock to invest in?

One of the core strengths of Mullen Group’s business model is its consistent focus on acquiring logistics and warehousing companies at a bargain and transforming their financials by improving operational performance. And the company has several decades of experience doing that successfully.

In the five years between 2017 and 2022, Mullen’s revenue increased by 76% to $2 billion, reflecting its consistent focus on business expansion and growing global demand for logistics and warehousing services. To add optimism, the company’s adjusted earnings during the same five-year period soared by 161% to $1.62 per share. Not only that, its 2022 adjusted net profit margin expanded to 7.9% in 2022 from just 5.6% five years ago.

It’s true that slowing economic growth and a challenging consumer spending environment have affected Mullen’s business lately, which could be the primary reason why MTL stock is trading negatively this year. Nonetheless, we shouldn’t forget that Mullen Group still managed to post positive revenue and net income growth in the first half of 2023, reflecting the underlying strength of its well-diversified logistics business portfolio.

Overall, its strong long-term fundamentals and consistent focus on business expansion make Mullen a great TSX dividend stock to earn monthly passive income.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
Mullen Group$13.772,000$0.06$120Monthly
Prices as of September 18, 2023

Earn $120 a month in tax-free passive income

If you add 2,000 shares of Mullen Group to your TFSA today, you can expect to receive $120 in tax-free monthly passive income from its dividends. To buy these many shares at the current market price, however, you’ll have to make a total investment of about $27,540. While this example should give you a good idea of how to start earning monthly passive income by investing in quality dividend stocks, you may want to diversify your portfolio by buying more such stocks instead of pouring a large sum of money into a single stock.

The Motley Fool has positions in and recommends Mullen Group. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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