TFSA Investors: How to Secure $150 Per Month in Growing Passive Wealth

Investing through a Tax-Free Savings Account (TFSA) is one of the best options for faster money growth. All interest, capital …

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Investing through a Tax-Free Savings Account (TFSA) is one of the best options for faster money growth. All interest, capital gains, and dividends you earn inside a TFSA are tax-free. The tax-advantaged account is also an excellent vehicle for growing passive wealth.

High inflation and interest rates are headwinds for stock market investors. Fortunately for TFSA investors, the TSX is still filled with reliable passive income providers. Some income-focused investors lean toward real estate investment trusts because most REITs pay monthly dividends.

Monthly payouts are advantageous because you can reinvest dividends 12 times a year, not the usual 4, for faster compounding of principal. But if you want to secure and earn at least $150 per month, consider investing in AI stock.

Not hype

This AI stock is not the highly talked about artificial intelligence but the ticker symbol for Atrium Mortgage Investment Corporation (TSX:AI). The $503.5 million non-bank lender provides residential mortgages and various commercial mortgages services, including land and development financing, construction, and mezzanine financing.

As of this writing, the small-cap stock trades at $11.43 per share. Current investors enjoy a 10.5% market-beating year-to-date gain in addition to the 7.77% dividend. Given the lucrative yield, 2027 shares or $23,168.61 will produce $1,800 in yearly dividends, or $150 monthly. In a TFSA, the passive income is tax-free.

However, you can only invest the lump sum amount through the TFSA if your available contribution room is also $23,168.61. Otherwise, it would take around three years and three months to accumulate the same number of shares if the annual TFSA contribution limit is $7,000.

Regular and special dividends

Atrium Mortgage can deliver growing passive wealth based on its dividend payment track record. The mortgage lender hasn’t missed a regular monthly dividend payment since January 2013. Furthermore, it has declared and paid a special dividend yearly since 2013.

On February 16, 2024, Atrium Mortgage announced a record $0.29 per share special dividend to shareholders of record on December 29, 2023. The declaration was made possible by the company’s record net income in 2023, notwithstanding a challenging real estate market.  

Exceptional year

“2023 proved to be an exceptional year for Atrium and its shareholders. The business posted record earnings per share of $1.18 and an outsized special dividend of $0.29 per share,” said Rob Goodall, CEO of Atrium Mortgage.

In the 12 months ending December 31, 2023, revenue increased 25.8% to $98.6 million versus 2022, although provisions for mortgage losses climbed 521.4% to $11.9 million from a year ago.

Still, full-year net income and comprehensive income rose 11.1% year over year to $51.5 million. Total dividend payments in 2023 reached $52.1 million, representing a 6.9% increase from the previous year. Management’s primary objective is to preserve capital and focus on a steady, safe return to shareholders.

Thus far, Atrium’s consistent earnings profile has sustained the monthly and annual special dividends. The company has also kept a low-risk portfolio since going public in 2012. As of year-end 2023, the portfolio loan-to-value ratio is 61.4%.

Standout income stock

TSFA investors can earn or build growing passive wealth from Atrium Mortgage, an income stock paying monthly dividends and yearly special dividends.  

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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