Turn $45,000 Into $236/Month Tax-Free to Help With Expenses

Nearing retirement or taking a career break due to unforeseen circumstances is something you should consider when planning investments. Such an event could require you to change your asset allocation and increase it towards income-generating stocks. Since you need help with expenses, you don’t want that income to attract tax. A portfolio rebalancing in the Tax-Free Savings Account (TFSA) could help you earn tax-free income.

How to preserve $45,000 in TFSA and still get tax-free income

When you need money, the most obvious option is to sell the stocks and withdraw the proceeds. If you plan for an event, you can preserve your TFSA portfolio and withdraw tax-free income.

In a crisis, do not act in a rush. Stay calm and write down the amount you seek. Do you seek a monthly payout? If yes, how much? Do you need a large amount?

In the first scenario, you could consider changing the asset allocation by selling growth stocks at their peak and buying high-yield dividend stocks.

If you purchased stocks like BlackBerry, Shopify, Celestica, and Suncor Energy at their multi-year lows, you might be sitting on a 100% plus capital gain combined. These stocks are trading near their high and have limited upside. Their valuations are stretched, and any developments in Trump tariffs could send them crashing. Now is a good time to sell them and invest that money in dividend stocks.

Since the money stays in the TFSA, no capital gains tax is levied.

How to turn $45,000 into $236/month

One seeks stability in a crisis, and strong dividend stocks could offer that. You could consider investing $15,000 each in three stocks and diversifying your tax-free income source.

TC Energy

TC Energy (TSX: TRP) transmits natural gas through pipelines and is offering a 5% dividend yield. The company will be affected if tariffs are levied on gas exports for a long time. As for the short term, its toll revenue is secure because 97% of its operating profit comes from regulated cost-of-service frameworks or take-or-pay negotiated contracts. These contracts reduce the risk of short-term fluctuations in commodity prices or volumes.

The pipeline operator plans to grow its dividend by 3-5% annually. For 2025, it is expected to give an annual dividend of $3.4 per share. 

A $15,000 investment can buy 234 shares that will pay $795.6 in annual dividends. In 10 years, this income could grow to $1,038.

CT REIT

CT REIT (TSX: CRT.UN) can give exposure to the retail store real estate with Canadian Tire as the main tenant. The real estate investment trust (REIT) gives monthly payouts from the rent. It keeps growing its rent through the intensification of existing stores and the development of new ones. While the valuation of the real estate determines the unit price of CT REIT, the payouts come from rent.

It is a good time to buy the units for $14.7 per unit and lock in a yield of 6.31%. The REIT grows its distribution every July by 3%, hedging against inflation. For 2025, you could get a $0.936713 dividend per share ($0.0771 per month till July and $0.0794 for the remainder of the year).

A $15,000 investment can buy you 1,024 units of CT REIT that could pay $959 in annual dividends. In 10 years, this income could grow to $1,236.

Telus

Telus (TSX: T) gives exposure to the communication sector. Among other Canadian telcos, Telus has an attractive dividend history of growing by 7% annually. The company pays dividends from its subscriptions and has a payout ratio of 81%. The stock is trading at an attractive price of $22.36, 23% below its average price of $29.

Because of the lower stock price, you can lock in a 7.2% yield. As the 5G revolution connects more devices to the internet and network, the need for more services will drive revenues, enabling Telus to continue growing its dividend.