With inflation eating into consumersâ pockets, having a secondary or passive income would greatly help. Investing in high-yielding dividend stocks would be one of the convenient ways to earn a passive income. Also, the returns would be tax-free if you make these investments through your TFSA (tax-free savings account).
For this year, the CRA (Canadian Revenue Agency) has fixed the contribution room atÂ $6,500, while the cumulative value since 2009 stands at $88,000. So, letâs assume you have the room to invest around $18,500. If you invest that amount equally among the following three Canadian stocks, you can earn a passive income of more than $130 every month. Let’s look at these companies in detail.
|COMPANY||RECENT PRICE||NUMBER OF SHARES||INVESTMENT||DIVIDEND||TOTAL PAYOUT||FREQUENCY|
Northwest Healthcare Properties REIT
Northwest Healthcare Properties REIT (TSX:NWH) owns and operates 231 healthcare properties across eight countries, with a total leasable area of 18.5 million square feet. Supported by its defensive portfolio, long-term lease agreements, and government-backed tenants, the company enjoys a higher occupancy rate irrespective of the economic outlook. Also, around 83% of its rent is indexed to inflation, thus shielding against rising prices.
However, amid a temporary increase in leverage and rising interest rates, the healthcare REIT has posted weak quarterly performance over the last two quarters, dragging its stock price and valuation down. Meanwhile, the company has opted to sell its non-core assets and lower its stake in several joint ventures, which could allow it to reduce its debt levels. So, given its defensive portfolio and initiatives to improve its financial position, I believe Northwest Healthcare’s dividends are safe. It currently pays a monthly dividend of $0.06667/share, with its forward yield at 11.95%.
Pizza Pizza Royalty
Another high-yielding dividend stock to have in your portfolio would be Pizza Pizza Royalty (TSX:PZA). The pizza chain operates Pizza Pizza and Pizza 73 brand restaurants through its franchisees. Due to its highly franchised business model, the companyâs financials are unaffected by rising prices and wage inflation. So, it generates stable cash flows, allowing it to raise its monthly dividends seven times since April 2020. With a monthly dividend of $0.075/share, it offers a forward yield of 6.41%.
Besides, the restaurant company has accelerated the expansion of its restaurant network while expecting to increase its restaurant count by 3â4% this year. Also, its restaurant renovation program, menu innovations, value messaging, and promotional activitiesÂ could boost its same-store sales, thus driving its royalty income. So, I believe PZAâs future payouts are safe.
My final pick would be Extendicare (TSX:EXE), which provides care and services to Canadians. The company reported a healthy second-quarter performance last month, with the occupancy rate of its LTC (long-term care) segment increasing by 60 basis points. Also, the average daily volume of its home health care increased by 4.1%.
Alongside the improvement in its operating metrics, its revenue increased by 3.7% to $307.5 million. Meanwhile, its NOI (net operating income) declined by $1.9 million to $28.5 million. However, removing one-time expenses, its NOI increased by $1.6 million amid higher home healthcare volumes and favourable rate revisions.
Notably, the demand for care and services could increase alongside the growing aging population, thus expanding the addressable market for Extendicare. Also, it is building a 256-bed LTC home in Peterborough, Ontario, to replace the existing 172-bed home. Besides, the company last month completed the previously announced transaction with Revera, acquiring 56 LTC homes and around 7,000 beds.Â These initiatives could boost its financials, thus making its future payouts safer. Meanwhile, Extendicare currently pays a monthly dividend of $0.04/share, thus offering an attractive forward yield of 7.63%.
The post Passive Income: How To Make $130 Per Month Tax-Free appeared first on The Motley Fool Canada.
Before you consider Extendicare, you’ll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2023… and Extendicare wasn’t on the list.
The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 26 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks
* Returns as of 8/16/23
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
- Passive Income: How Much Should You Invest to Earn $500 Every Month?
- 3 Stocks I Bought This Month
- 4 Cheap Dividend Stocks to Boost Your Passive Income
- Passive Income: How to Make $270/Month TAX FREE!
- How to Triple Your Payout With 3 TSX Dividend Stocks
Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Northwest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy.