Invest $30,000 in 3 Stocks for $1,280 in Passive Income

The TSX is an excellent market for investors seeking ways to create a passive income stream in Canada. Canadians also enjoy the benefit of being able to buy and hold investments in a Tax-Free Savings Account (TFSA). Returns from qualifying investments that you hold in a TFSA do not come with strings attached in terms of taxation.

Since you use after-tax dollars to fund a TFSA, any returns through interest, capital gains, or dividends can grow your wealth without incurring taxes. Using the available contribution room in your TFSA to hold a portfolio of income-generating assets, like the best dividend stocks, can help you unlock massive potential to generate tax-free income for a long time.

Here are three of my favourite picks for this purpose.

Fortis

Fortis Inc. (TSX: FTS) is a favourite for many institutional and individual investors. It is one of the few Canadian dividend stocks with royalty status, having increased payouts to investors for 52 consecutive years. This is the kind of reliability in dividend income and growth you want to see for long-term TFSA holdings.

The $39.3 billion market-cap TSX company owns and operates several natural gas and electricity utility businesses in Canada, the US, and the Caribbean. Almost its entire revenue comes from long-term contracted assets in these rate-regulated markets, meaning that it has predictable cash flows. Due to the essential nature of its services, the money will keep flowing, letting the management continue funding dividend growth for years to come.

Canadian Natural Resources

Canadian Natural Resources Ltd. (TSX: CNQ) is another staple in many investment portfolios for similar reasons. The $115.4 billion market-cap company headquartered in Calgary is Canada’s largest energy producer. It is the best-in-class in terms of the oil and gas industry stocks that you can consider investing in on the TSX and an excellent dividend-paying investment.

While the long-term view on traditional energy commodities suggests that they are being phased out, there is still time before that happens. CNQ’s portfolio of assets includes some of the longest-life assets and the largest energy reserves for it to tap into for several decades. The company generates solid cash flows that it can use to fund and increase its quarterly dividends.

Enbridge

Enbridge Inc. (TSX: ENB) is yet another staple for dividend-seeking investors. The $159.9 billion market-cap energy player might not be the largest oil producer in Canada, but it is a top player in the energy sector. The North American energy infrastructure and utilities sector giant owns and operates an extensive network that transports around 20% of the natural gas consumed in American businesses and homes. It also transports around a third of the oil produced in the US and Canada.

Between its energy transportation operations and cash flows from its utility segment, Enbridge has the kind of economic moat to comfortably increase its quarterly payouts while investing in its expansion. The stock has increased its payouts for 31 consecutive years, and it looks well-positioned to continue its streak for years to come.

Foolish takeaway

When investing in dividend stocks for passive income or any other purpose, it’s important to remember never to put all your eggs in just a few baskets. Diversifying across several income-generating assets reduces the risk to your capital. Here is a quick look at how a hypothetical $30,000 divided across these three TSX stocks can deliver around $1,280 per year in passive income.