There’s a reason for my madness, trust me. As a mother of two and inflation showing zero signs of letting up, having extra cash on hand is a great plan. However, in this case, I’m not just looking to create passive income for my Tax-Free Savings Account (TFSA) to spend. I’m trying to invest that again and again.
Why? Again, mother of two things. While I can always try to cut back, it’s investments that help me sleep at night. These are the gains I look to make for my children’s future to allow them any type of future they want. Today, let’s look at how to make that $250 per month to put towards any type of dream.
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Create that income
Here, it is going to be a case of having money to make money. In this case, with a goal of $250 per month, that adds up to $3,000 per year. Plus, investors want to make sure that cash is coming in now and for life. This means looking into the investment of blue-chip stocks.
Right now, the average blue-chip stock yields around 5%. That means as of writing, you’d need to invest about $60,000 (though we’ll get more into that later). The cost is high, yes; however, those investments are perfect for a TFSA, especially if you’re looking to either reinvest or compound that growth for the future.
That’s because dividends and capital gains in a TFSA are never taxed. Therefore, for every $250 per month that lands in your account, when you take it out, it goes directly into your pocket! And many TSX dividend giants raise payouts annually, not just protecting your income from inflation, but increasing it even beyond. And by reinvesting dividends, this allows investors to build wealth faster inside a TFSA rather than a taxable account.
Consider ENB
If you’re looking for a safe and solid dividend stock for TFSA income, then Enbridge (TSX: ENB) belongs on your watchlist. First, there’s the dividend. Enbridge stock currently offers a 5.6% dividend yield at $67.50 per share. That comes out as $3.77 each year. Plus, the coverage is strong, with distributable cash flow (DCF) of $5.50 to $5.90 per share easily covering the $3.77 payout.
And not only is the dividend strong, but the returns are as well. This comes from the dividend stock earning cash from regulated utilities, long-term contracts, and pipeline tariffs. These are stable enough to get through any economic cycle. Plus, there remains more growth to come. Right now, Enbridge stock has $32 billion in secured projects in its backlog across a diverse range of expansions. Management now expects 5% annual earnings before interest, taxes, depreciation, and amortization, earnings per share, and DCF growth beyond 2026.
So, how do you create that income? To create $3,000 per year in annual dividend income, it would mean purchasing 796 shares. That would come to an investment of $53,700, bringing your income to $3,002 annually. But remember, this isn’t even including returns, which could bring investors even more cash flow.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| ENB | $67.45 | 796 | $3.77 | $3,002 | Quarterly | $53,696 |
Bottom line
Not only does Enbridge stock look like a great investment for passive income today, but it’s a solid investment for returns tomorrow. And that’s a tomorrow I want filled with opportunity for my children. That’s why if you want a stable future, Enbridge stock certainly belongs on your TFSA watchlist.
