What if you could earn an extra $200 per month of passive income and keep every dollar? For Canadian investors, the Tax-Free Savings Account (TFSA) is the perfect place to invest, collect income, and build wealth, without any tax implications. Yes, that is right, all the income inside of the account is completely tax-free with very few strings attached!
By holding the right mix of dividend paying stocks in the TFSA, you can earn a low-risk, steady income stream. If you split a $50,000 TFSA account equally between four stocks, you could earn more than $200 per month. Here is how it could work.
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An infrastructure stock for passive income
I would put my first $12,500 into Pembina Pipeline (TSX:PPL). It yields 5.4% right now. That investment would earn $166.85 quarterly, or average $55.62 monthly.
It is a major energy infrastructure provider in Western Canada. Its pipelines and midstream facilities are crucial for energy providers to get their commodities to market.
While Pembina is only growing by a low single digit rate right now, its dividend is widely supported by its contracted asset base. It has several major projects (including an LNG terminal) that will be put into service in the next five years. They will provide growth, but investors will need to be patient to enjoy that growth.
A retail real estate stock for monthly distributions
Choice Properties REIT (TSX:CHP.UN) is another stock to deploy $12,500 of TFSA cash into. This dividend stock yields 5.2% today. It pays its distribution monthly, so investors would earn $53.96 with this investment.
With a market cap of $10.8 billion, this is one of the largest real estate investment trusts (REITs) in Canada. Most of its portfolio is grocery-anchored retail with its main anchor tenant being Loblaws. However, it has a substantial industrial portfolio as well.
Occupancy is high (98%) and it has long-term leases (near seven years). A solid balance sheet should support modest distribution growth in the years ahead.
An energy royalty for passive income
Topaz Energy (TSX:TPZ) is an intriguing play for a growing stream of income. Topaz stock yields 4.9% today. A $12,500 TFSA investment would earn $151.76 quarterly or $50.59 averaged monthly.
Topaz is a nice way to get exposure to Canadian energy but with lower operational risks. As a royalty and infrastructure company, the structure helps mitigate its direct exposure to commodity pricing risk. Its acreage is located in some of the top regions for production growth in Canada, providing a nice organic growth opportunity.
Topaz has increased its dividend nine times since 2021. Your TFSA is likely to enjoy a nice mix of capital and dividend returns.
Industrial real estate for monthly income
Granite REIT (TSX:GRT.UN) is another real estate stock to put $12,500 of TFSA cash to work in. It yields 4.3%. Your investment would earn $44.99 monthly.
Granite has a high quality portfolio with a strong 97% occupancy rate and a high quality mix of tenants. The REIT has a sector-leading balance sheet that affords annual dividend growth. It has increased its distribution for 15 consecutive years.
For mid-single digit growth in cash flows and distributions, this is a very solid, low-risk name to own for passive income.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Pembina Pipeline | $52.97 | 235 | $0.71 | $166.85 | Quarterly |
| Choice Properties REIT | $14.86 | 841 | $0.064 | $53.96 | Monthly |
| Topaz Energy | $27.59 | 453 | $0.335 | $151.76 | Quarterly |
| Granite REIT | $82.20 | 152 | $0.296 | $44.99 | Monthly |
