TFSA Passive Income: Earn $110/Week Tax Free for the Rest of Your Life

The annual contribution room for the Canadian Tax-Free Savings Account (TFSA) remained at $6,000 in 2022. That meant that the cumulative contribution room rose to $81,500 for those who have been eligible to contribute since January 2009. Today, I want to discuss how passive-income focused investors can churn out nice dividends in their TFSAs going forward.

In our hypothetical today, we are going to utilize all our TFSA room to churn out big monthly passive income. Investors should keep in mind that this is a heavy-handed approach that carries more risk than a more diversified portfolio. That aside, let’s jump in.

This dividend stock is a perfect addition to your TFSA in 2022

First National (TSX:FN) is a Toronto-based company that originates, underwrites, and services commercial and residential mortgages in Canada. Shares of this dividend stock have dropped 12% in 2022 as of close on September 8. The stock is down 18% year over year.

Investors got to see First National second-quarter (Q2) fiscal 2022 earnings on July 26. It saw mortgages under administration (MUA) rise 5% to a record $127 billion. Meanwhile, revenue rose 14% to $416 million. However, investors should expect growth to slow considerably, as Canadian real estate has succumbed to the aggressive rate-tightening program from the Bank of Canada (BoC).

This dividend stock last closed at $37.24 per share. In our hypothetical, we can snatch up 700 shares of First National for a purchase price of $26,068. The stock offers a monthly dividend of $0.196 per share, which represents a tasty 6.3% yield. These holdings will allow us to generate weekly passive income of $31.66 on average in our TFSA.

Here’s why Sienna can power your passive-income portfolio

Sienna Senior Living (TSX:SIA) is a Markham-based company that provides senior living and long-term-care (LTC) services in Canada. This dividend stock has dropped 13% in the year-to-date period. Its shares are down 14% from the same time in 2021.

In Q2 2022, the company reported adjusted revenue of $180 million — up 10% from the previous year. Meanwhile, same-property net operating income (NOI) jumped 9.8% to $33.1 million.

Shares of Sienna closed at $13.21 on September 8. In our scenario, we can scoop up 2,000 shares of this dividend stock for a total price of $26,420. This stock offers a monthly dividend of $0.09 per share, representing a monster 7% yield. That means we can churn out passive income of $36 a week in our TFSA going forward.

One more stock that is designed to churn out passive income for its shareholders

Freehold Royalties (TSX:FRU) is the third and final dividend stock I’d target in our TFSA today. This Calgary-based oil and gas royalty company owns working interests in oil, natural gas, natural gas liquids, and potash properties in Western Canada and the United States. The energy stock has increased 17% in the year-to-date period.

This dividend stock closed at $14.20 on September 8. We can snatch up 2,040 shares of Freehold for a purchase price of $28,968. The stock last paid out a monthly dividend of $0.09 per share. That represents a huge 7.6% yield. This investment allows us to churn out weekly passive income of $42.36 in our TFSA.

Conclusion

TFSA investors can generate weekly passive income of $110.02 for the rest of 2022 and beyond.

The post TFSA Passive Income: Earn $110/Week Tax Free for the Rest of Your Life appeared first on The Motley Fool Canada.

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Fool contributor Ambrose O’Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends FREEHOLD ROYALTIES LTD.