The Tax-Free Savings Account (TFSA) is set to increase its contribution limit by $6,500 in 2023. That means Canadian investors who were 18 years (or older) in 2009 can contribute a grand total of $88,000 into their TFSA next year.
Any opportunity to maximize tax efficiency should be utilized by Canadian investors. Over a lifetime, you can save thousands of tax dollars by simply investing through your TFSA.
Turn $70,000 into $320 of tax-free monthly income
If you are more inclined to invest for passive income, the TFSA is a great place to hold your stock investments. While we recommend a widely diversified portfolio (at least 8 to 10 stocks), here is a simple three-stock portfolio that demonstrates the level of dividends you can collect from Canadian stocks today. If you put $70,000 to work, it could earn an average of $320 per month of tax-free passive income.
A real estate stock for your TFSA
At a price of $11.65 today, Dream Industrial Real Estate Investment Trust (TSX:DIR.UN) pays an attractive 5.87% dividend yield. If you put $23,333 into this real estate stock, you would earn $116.72 of monthly distributions.
With interest rates rising, real estate stocks have been on the decline. Dream Industrial stock is down 32.6% in 2022.
Unfortunately, this masks Dreamâs high-quality portfolio of warehousing and distribution properties. The company has delivered 99% occupancy, a strong rental rate growth, and +10% funds from operations per unit growth this year.
Dream has a very good balance sheet and capital flexibility even though interest rates are rising. Likewise, its dividend is well-covered by the cash flows it collects. Today, it trades at a severe discount to its private market value so it is an attractive stock if you can look out several years ahead.
A top TFSA renewable power stock
Renewable energy stocks have recently pulled back significantly. That presents a good opportunity to upgrade your portfolio in the segment. One of the best quality renewable stocks you can buy is Brookfield Renewable Partners (TSX:BEP.UN).
It has fallen 20.5% in 2022. Investors can buy the stock for $36 per share and get a nice 5.65% dividend yield. A $23,333 investment would earn $278.21 per quarter or $92.74 averaged monthly.
Brookfield Renewables is a world leader in renewable energy. It has an anchor portfolio of coveted hydro power assets that are complimented by a growing pipeline of wind, solar, distributed generation, battery, and even nuclear power projects. Its large development pipeline should fuel decades of relatively low-risk, high single-digit growth ahead.
An energy stock with a fast-growing dividend
If you want an off-handed way to play oil stocks in your TFSA, Topaz Energy (TSX:TPZ) could be a good income stock. At $20.89, this stock could earn a 5.8% dividend yield in your TFSA. A $23,333 investment could earn $335.70 every quarter or $111.91 averaged monthly.
Topaz owns very well-located royalty and energy infrastructure assets in Western Canada. It was spun out of Tourmaline Oil in late 2019. Since its inception, its dividend has risen by 50%! In fact, it has increased its dividend five times since June 2021.
The company has made several acquisitions in areas of fast-growing energy production. Given low supply and growing energy demand, Topaz should continue to grow its dividend by a substantive rate in the years ahead.
|COMPANY||RECENT PRICE||NUMBER OF SHARES||DIVIDEND||TOTAL PAYOUT||FREQUENCY|
|Dream Industrial REIT||11.65||2002||$0.05833||$116.72||Monthly|
|Brookfield Renewable Partners||36.06||647||$0.43||$278.21||Quarterly|
The post TFSA Investors â How to Earn $320 in Monthly Passive Income Right Now appeared first on The Motley Fool Canada.
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* Percentages as of 11/29/22
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Fool contributor Robin Brown has positions in Brookfield Renewable Partners, Dream Industrial Real Estate Investment Trust, and Tourmaline Oil. The Motley Fool recommends Brookfield Renewable Partners, Dream Industrial Real Estate Investment Trust, and Topaz Energy. The Motley Fool has a disclosure policy.