Building a passive income stream from within a TFSA is one of the most powerful financial moves that Canadians have at their disposal. With the right mix of income-producing stocks, even a starter $14,000 allocation can create a long-term cash-gushing machine.
One of the advantages of the TFSA is that dividends earned inside the account are completely tax-free. Additionally, the withdrawals are never taxed, irrespective of how much income is generated. This makes it ideal for an income-generating portfolio.
Here’s a look at three long-term holdings that can start generating income today to build that cash-gushing machine.
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Start with a stable, dependable income producer
Enbridge (TSX:ENB) is the first component of that cash-gushing portfolio. Enbridge is one of the largest energy infrastructure stocks on the market, with decades of steady dividend payments.
The bulk of the company’s revenue is generated from its massive pipeline business. That segment moves a decent amount of North America’s oil and natural gas. This makes it a defensive and stable revenue generator. In fact, long-term contracts and the passive nature of the segment make it closer to a utility or toll road business.
Speaking of utilities, Enbridge’s other segments provide an equally attractive and defensive stream of revenue. That includes a renewable energy business and one of the largest natural gas utilities in North America.
Collectively, the segments provide ample revenue for Enbridge to continue investing in growth and paying its quarterly dividend. That dividend currently offers a yield of 5%. Enbridge has also provided annual increases to that dividend for over three decades without fail.
That fact alone makes this a worthy component of our cash-gushing machine.
Generate monthly income backed by necessity retail
Another great option to include in the cash-gushing machine is Slate Grocery REIT (TSX:SGR.UN). Slate is a REIT that offers investors exposure to a portfolio of U.S.-anchored grocery real estate locations.
The defensive appeal of that is huge. Grocers are one of the most defensive components of the retail sector, thanks to their necessity-based appeal. Irrespective of how the market fares, people need to buy groceries.
Slate’s properties also host a variety of secondary tenants. These are smaller businesses that include restaurants, banks, pharmacies and other businesses often found next to grocers. These businesses provide the REIT with additional revenue and help to feed additional foot traffic between other tenants.
Slate offers investors a monthly distribution that works out to a yield of 7.6%, making it one of the better-paying options on the market.
This pick provides balanced growth and income
A third option for our cash-gushing machine is another REIT, RioCan (TSX:REI.UN). RioCan is one of Canada’s largest REITs, with a portfolio that includes both retail and mixed‑use properties in major metro markets.
RioCan’s growing mixed-use portfolio is underrated. This gives the REIT access to a broader slice of the market rather than merely focusing on the retail side. The mixed-use properties comprise residential towers sitting atop several retail floors. Like Slate, this leads to shared traffic across the entire site and results in higher occupancy rates.
RioCan’s strong occupancy rates and ongoing redevelopment projects help support stable cash flow, while the REIT’s monthly distribution provides a blend of income and long‑term growth potential.
As of the time of writing, RioCan’s monthly distribution earns a yield of 5.4%.
How $14,000 can turn into a TFSA cash‑gushing machine
Combining the trio of stocks mentioned above creates a diversified, cash-gushing machine that can provide long-term compounding as well as income. The tax-free appeal of the TFSA furthers that potential even more.
Here’s how that income potential pans out with a total of $14,000 spread across the three stocks.
| Company | Recent Price | Total Invested | No. Of Shares | Dividend | Total Payout | Frequency |
| Enbridge | $75.71 | $4,000 | 52 | $3.88 | $201.76 | Quarterly |
| Slate Grocery REIT | $15.37 | $6,000 | 390 | $1.18 | $460.20 | Monthly |
| RioCan REIT | $21.18 | $4,000 | 188 | $1.16 | $218.08 | Monthly |
| Total: | $880.04 |
