TFSA Strategy: Turn $80,000 Into $315 Monthly Passive Income

Are you wondering how to get a tax-free boost in passive income? This $80,000 TFSA portfolio could earn as much as $315 every month!

Key Points
  • Dream Industrial REIT (TSX:DIR.UN): Invest $20,000 for a 5.2% yield, earning $85.56 monthly from a diversified industrial property portfolio.
  • Choice Properties REIT (TSX:CHP.UN): Earn $83.40 monthly from a $20,000 investment with a 5% yield, anchored by essential retail and industrial properties.
  • Surge Energy (TSX:SGY) and Richards Group (TSX:RIC): Each $20,000 investment offers yields of 4.7% and 4%, generating $78.19 and $67.32 monthly, respectively, from energy production and a pivot to resilient supply sectors.

The TFSA (Tax-Free Savings Account) is a good place to invest for passive income. You don’t have to pay any tax on the passive income you earn in the account, so it’s a quick and easy way to accelerate returns. If you like monthly passive income, you will have to look a little harder.

Most dividend stocks have converted to a quarterly dividend. However, you can still find some monthly passive income from real estate, industrials, and energy. If I had $80,000, I’d split it evenly between four Canadian stocks to earn a combined $315 per month of passive income.

Blocks conceptualizing Canada's Tax Free Savings Account

Source: Getty Images

Dream Industrial: Passive income from real estate

The first monthly passive income stock for a TFSA is Dream Industrial Real Estate Investment Trust (TSX: DIR.UN). This $4 billion REIT is one of the largest industrial landlords in Canada. It also owns and manages properties in Europe and the United States.

It has high-quality assets and a diversified mix of tenants. The REIT is growing cash flows per unit at a mid-single-digit rate. It actually just raised its distribution for the first time in several years. Its payout ratio has declined considerably in recent years, so management obviously feels confident about future results.

Dream stock yields 5.2% right now. Investing $20,000 in Dream at $14.02 today would earn you $85.56 of passive income every month.

Choice Properties: Safe and steady income

Choice Properties REIT (TSX: CHP.UN) is the next stock I would be buying for my TFSA. If you want real estate scale and exposure to high-quality retail and industrial assets, this is the stock to own.

With 700 properties, it is the largest REIT in Canada. Its properties provide necessity-based goods. Its anchor tenant is Loblaw, which is Canada’s largest grocer and pharmacy chain. It may not be growing much. However, its income is steady and contracted on long-term leases.

Choice stock yields 5%. A $20,000 investment at $15.58 would earn $83.40 of passive income monthly.

Surge Energy: Passive income from energy

Another TFSA stock to buy for passive income is Surge Energy (TSX: SGY). This is a way for you to get exposure to the energy industry and collect a nice dividend stream.

Surge produces 23,000 barrels of oil per day across Alberta and Saskatchewan. 90% of its production is oil, so it benefits from oil prices remaining elevated over $80 per barrel. Even with a 4.7% dividend, it is generating substantial free cash flow. It only has a payout ratio of 36% here.

Certainly, oil prices and oil stocks can be volatile, so keep that in mind with this stock. A $20,000 investment at $11.07 would earn $78.19 of passive monthly income.

Richards Group: A turnaround play

Richards Group (TSX: RIC) is another stock for passive income. This company is in the midst of a turnaround strategy. It is pivoting from traditional packaging to become a medical, aesthetic, and dental supplier.

These are more resilient, less cyclical industries that tend to earn better margins as well. In recent quarters, Richards started to see growth and margin improvements after a few tough years. The company has a strong balance sheet and generates a lot of cash.

It yields 4%. A $20,000 investment at $32.66 would earn $67.32 of passive income monthly.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
Dream Industrial REIT$14.021,426$0.06$85.56Monthly
Choice Properties REIT$15.581,283$0.065$83.40Monthly
Surge Energy$11.071,806$0.0433$78.19Monthly
Richards Group$32.66612$0.11$67.32Monthly

Fool contributor Robin Brown has no position in any of the stocks mentioned. The Motley Fool recommends Dream Industrial Real Estate Investment Trust and Richards Group. The Motley Fool has a disclosure policy.

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