Passive Income: How to Make $171.33 Per Month Tax Free

This passive income stock could create the best long-term passive income option for today’s investor! Just watch and see.

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I wouldn’t blame Canadian investors who are still quite focused on creating passive income through dividends. However, that shouldn’t be your only focus. Instead, passive income should be considered through both dividends and long-term returns.

So today, let’s focus on a great dividend stock option for this goal – one that can help you create massive amounts of monthly income, all tax free.

First, the tax-free part

If you’re hoping to create tax-free income, then you need to have a tax-free account. That would mean the Tax-Free Savings Account (TFSA), especially if you’re younger. This can help you save for the long-term, but also allows you to take out cash if you need it for an emergency.

And now that we’re in 2024, Canadians have access to a total of $95,000 in contribution room! That is, as long as you were at least 18 in 2009. Now, that’s a lot of room. And you definitely want to try and max it out to create as much passive income as possible.

That being said, don’t put yourself in debt trying to create passive income. That’s not the point here, and can add up to tons in interest to pay down debt. Instead, look at your budget and see what you can put away each month without fail. Then, contribute automatically through automated contributions through your banking institution.

A monthly option to consider

If you want a monthly dividend stock for long-term passive income, you want a stock that’s been around for a long time. That’s why I would consider a company such as Granite REIT (TSX:GRT.UN). This real estate investment trust (REIT) has been on the market for 20 years now, focusing on investments in industrial properties.

This has created a prime opportunity as of late. The rise of ecommerce led to a huge surge in share price, especially over the pandemic. However, this has since dropped as ecommerce declined as well. The thing is, the market still has high demand for industrial properties.

Whether it’s storage for products, assembly lines for vehicles, or shipping, Granite stock provides it all. What’s more, it continues to expand by purchasing and building more and more properties. So there is certainly a strong future ahead.

How much you could make

If you want to make a lot of passive income, it could take a while to strike it rich. However, let’s say you were able to put aside $5,000 right away, and add $500 each month. That would mean you could create $11,000 in contributions by the end of this year.

Now, to see how much you could create, consider that Granite stock has increased to $88 in the last year in share price. It’s now at $77, providing a potential upside of 14%. Also consider adding in a dividend at 4.33% as of writing. Together, here is what that could create.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYPORTFOLIO TOTAL
GRT.UN – now$77143$3.30$471.90monthly$11,000
GRT.UN – high$88143$3.30$471.90monthly$12,584

By this time next year, you could create returns of $1,584 along with annual dividend income of $471.90. That’s total passive income of $2,055.90, or $171.33 each month! All tax free.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Granite Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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