Are you an investor who wants to focus on using stock market investing to generate a passive income stream? The Tax-Free Savings Account (TFSA) can be the best tool to make extra money that will not incur taxes. As long as your holdings align with TFSA requirements and you do not go over your annual contribution limit, any earnings from interest, capital gains, or dividends in your account will be tax-free.
The TSX has several high-quality monthly dividend-paying stocks that you can use to turn the TFSA into a monthly passive income stream. Suppose you have a hypothetical $14,000 to invest, which is twice the TFSA annual contribution room in 2025. You can use that money to generate a consistent monthly income by investing in monthly dividend-paying stocks.
Healthcare-focused REIT
Real Estate Investment Trusts (REITs) are publicly traded companies on the TSX that you can invest in to become a lazy landlord. The idea is that you purchase units of the company like you would buy shares of a stock. Based on the number of units or shares you own in the REIT, it provides you with monthly distributions from its profits. REITs are trusts that invest in a portfolio of real estate assets, generating money through those properties. By investing in one, you can enjoy the benefits of being a real estate investor without the cash outlay or hassle of actually being one.
NorthWest Healthcare Properties REIT (TSX:NWH.UN) is a particular favourite of mine. The $1.3 billion market-cap trust provides investors with exposure to a portfolio of diverse, high-quality, healthcare-focused real estate. The company’s portfolio spans Canada, Australasia, Brazil, and Germany. It is the only REIT solely focused on healthcare, making it a niche within the real estate industry.
As of this writing, NWH.UN trades for $5.14 per share and boasts an annualized 7% dividend yield that it pays out each month.
Oil and gas giant
Canadian energy stocks have long been popular holdings for many Canadian investors due to the reliable wealth growth through capital gains and dividends that many of them enjoy. Let’s take a look at a leading Canadian dividend stock that has been performing well over the course of the year. The company engages in the acquisition, development, and production of crude oil and natural gas.
While governments worldwide plan to phase out reliance on traditional fossil fuels, that day might take years or even decades to materialize. Until then, oil producers like Whitecap Resources (TSX:WCP) will continue to meet the demand. In turn, investors will benefit. As of this writing, Whitecap Resources trades for $10.65 per share and boasts a 6.9% annualized dividend yield that it pays out each month.
Foolish takeaway
You must never forget that stock market investing is risky, no matter how reliable a stock is. It is important to diversify your capital across several high-quality holdings to mitigate the risks that come with stock market investing. However, for the sake of providing an example, here is how $14,000 divided across the two might look in terms of generating tax-free income via monthly dividends in a TFSA:
| Ticker | Recent Price | Total Investment | Number of Shares | Dividend Per Share Per Year | Total Annual Payout |
| NWH.UN | $5.14 | $7,000 | 1361 | $0.36 | $489.96 |
| WCP | $10.65 | $7,000 | 662 | $0.73 | $483.26 |
| Total Payout | $973.22 |
