Who doesn’t want a little extra tax-free passive income? Well, any income earned in the TFSA (Tax-Free Savings Account) is safe from tax consequences. If you like earning passive income and want to consistently re-invest the proceeds, the TFSA is the ideal place to compound income streams.
You start with a small amount invested. As those investments yield cash, you re-invest it into more investments. Over time, your portfolio and passive income can steadily grow.
If you want to compound your passive income, here is a mini-TFSA portfolio. Put $40,000 of TFSA cash across these four stocks and you could earn as much as $212 in average monthly cash.
An energy stock yielding huge cash
Tourmaline Oil (TSX: TOU) only yields a base dividend of 1.55%. However, that base dividend doesn’t factor in the substantial special dividends this company has been paying since 2021. If Tourmaline continues to pay $1 per share of special dividends every quarter, TOU will yield an extra 5.85% this year.
Tourmaline is one of the most efficient natural gas producers in Canada. It has almost no net debt and ample energy reserves that it can drill at only incremental cost. As a result, the company is very comfortable distributing 100% of its excess cash right back to shareholders.
If Tourmaline pays $5.04 per share in total dividends in 2023, a $10,000 TFSA investment would earn $735.84 annually, or $61.32 averaged monthly.
An energy infrastructure play for excess passive income
If you want an outsized dividend yield in your TFSA, Pembina Pipeline (TSX: PPL) could be well-positioned to deliver it. It operates a diverse mix of crucial energy assets (pipelines, midstream/processing plants, and export terminals) across Western Canada and the U.S.
Rising prices in Western Canadian Select crude could mean that more volumes might flow through its assets. Likewise, the profit spread on the energy products it processes and resells increases when energy prices rise.
Today, this stock yields 6.5%. It isn’t growing much, but its balance sheet and dividend are very solid. Put $10,000 of TFSA cash in Pembina stock and you would earn $648.81 of passive income annually, or an average of $54.07 monthly.
A renewables stock with a safe dividend
If you are looking for a cleaner energy investment, Brookfield Renewable Partners (TSX: BEP.UN) is one of the premier green energy stocks. It has 32 gigawatts (GW) of solar, wind, hydro, battery, and distributed generation in operation today.
However, its development pipeline is over four times that size. It expects to increase its production by 45% over the next three years. The company has steady growth opportunities now and for years ahead.
This TFSA stock yields 5.4% today. An investment of $10,000 in BEP stock would earn $524.16 of passive income annually, or $43.68 averaged monthly.
A beaten-down telecom yielding outsized passive income
A final stock for a TFSA is TELUS (TSX: T). It has had a few rough quarters, but it has made quick moves (efficiency measures and layoffs) to right size its earnings. The market has not yet factored in these initiatives and total cost savings. Yet, they could be substantial.
In the meantime, the company is expected to generate a significant amount of excess cash as its outsized capital investment cycle wanes. While you wait for the stock to recover, you earn an outsized 6.35% dividend yield.
A $10,000 investment in TELUS would earn $638 of annual passive income, or $53.17 in average monthly income.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Tourmaline Oil | $68.33 | 146 | $1.26 | $183.96 | Quarterly |
| Pembina Pipeline | $40.99 | 243 | $0.6675 | $162.20 | Quarterly |
| Brookfield Renewable Partners | $34.71 | 288 | $0.455 | $131.04 | Quarterly |
| TELUS | $22.72 | 440 | $0.3625 | $159.50 | Quarterly |
