TFSA Monthly Money: How to Generate Consistent Tax-Free Passive Income

Adding these two attractive Canadian dividend stocks to your TFSA now could help you earn reliable monthly passive income for years to come.

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Do you want to unlock the full potential of your hard-earned savings by turning your Tax-Free Savings Account (TFSA) into a powerhouse of tax-free passive income? If yes, you should consider investing in some quality Canadian monthly dividend stocks from your TFSA. Doing so could give you the freedom to receive monthly payments that are completely sheltered from taxes, helping you achieve your financial goals faster.

Let’s look at two outstanding monthly-paying dividend stocks that TFSA investors can buy today and hold for the next decade.

Choice Properties REIT stock

Choice Properties REIT (TSX:CHP.UN) is a Toronto-based real estate investment trust (REIT) that owns and manages a diverse portfolio of residential, retail, and industrial properties across Canada. It currently has a market cap of $4.3 billion, as its stock trades at $13.04 per share with about 6.5% year-to-date declines. The REIT offers a decent annualized dividend yield of 5.8% right now and distributes these dividend payouts every month.

In the first quarter of 2024, Choice managed to meet Street analysts’ expectations by reporting a 6.1% YoY (year-over-year) rise in its funds from operations to $0.26 per share. At the end of the quarter, the REIT had a solid occupancy rate of 97.9%, with retail occupancy at 97.7%, industrial at 98.8%, and mixed-use and residential properties at 94.7%. This stable occupancy clearly reflects the continued strong demand for necessity-based properties in Canada, which forms the core of Choice Properties’s portfolio. This was one of the key reasons why its rental revenue also rose 4.1% YoY to $337.96 million.

Despite the ongoing macroeconomic challenges, Choice Properties remains focused on taking proactive steps to boost its long-term growth outlook. For example, it completed $61.7 million in real estate transactions during the March quarter, including the acquisition of a Toronto retail property from Loblaw Companies for $38.4 million and the disposition of an industrial property and retail property for a total of $23.3 million.

Given these efforts amid positive leasing momentum, along with Choice REIT’s strong tenant base, I expect its share prices to soar in the years to come.

Sienna Senior Living stock

Sienna Senior Living (TSX:SIA) could be another strong monthly dividend stock to invest in Canada right now. Shares of this Markham-headquartered seniors’ living provider have surged by nearly 30% so far in 2024, outperforming the broader market by a wide margin as the TSX Composite has gone up by only 7.2% year to date. With this, SIA stock now trades at $14.89 per share with a market cap of $1.1 billion. At this market price, SIA stock has an attractive 6.3% annualized dividend yield.

In the March quarter, Sienna posted an outstanding 76% YoY increase in its same-property net operating income to $63.9 million with the help of positive growth across key segments. Besides the improving occupancy at its retirement homes in the post-pandemic era, the company’s growing focus on expanding its long-term care platform and range of services could help it maintain the positive momentum, making it a really attractive monthly dividend stock to buy for the long term.

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.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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