TFSA Passive Income: Make Over $410/Month Tax Free for the Rest of Your Life

The S&P/TSX Composite Index suffered its worst single-day drop since June on September 13. Fortunately, there was some bounce back, as it was up triple digits in late-morning trading today. Regardless, investors may want to explore passive-income strategies, as volatility continues to squeeze their portfolios. That income is even better in tax-free form.

In this article, I want to explore how you can look to generate over $410 per month in your Tax-Free Savings Account (TFSA) for the long haul. To do that, we are going to be utilizing all our cumulative contribution room of $81,500. That said, investors should look to maximize diversification in their TFSA, or any portfolio, rather than rely on a handful of stocks to generate growth or income. Investors who take that route are subjecting themselves to considerably more risk in comparison to a properly diversified portfolio. This article is an example of just how much income you can generate with the right investments. Let’s jump in.

This energy stock offers big dividends for your TFSA

Pembina Pipelines (TSX:PPL)(NYSE:PBA) is a Calgary-based company that provides transportation and midstream services for the energy industry. Shares of this energy stock have climbed 24% in 2022 as of late-morning trading on September 14. That has pushed the stock into positive territory in the year-over-year period.

This company released its second-quarter fiscal 2022 results on August 4. It delivered total revenues of $3.09 billion compared to $1.90 billion in the prior year. Meanwhile, adjusted cash flow from operating activities rose to $683 million over $538 million in the second quarter of 2021.

Its shares closed at $46.96 as of close on September 13. In this hypothetical, we can snatch up 550 shares of Pembina Pipelines in our TFSA for a purchase price of $25,828. The energy stock offers a monthly distribution of $0.217 per share, which represents a strong 5.5% yield. This investment will allow us to generate tax-free passive income of $119.35 going forward.

Here’s a REIT that can deliver strong passive income

Northwest Healthcare REIT (TSX:NWH.UN) is a Toronto-based real estate investment trust (REIT) that owns and operates a portfolio of high-quality global healthcare real estate. Its shares have dipped 9.8% in the year-to-date period. In the second quarter of 2022, it delivered revenue growth of 24% to $111 million. Meanwhile, total assets under management (AUM) jumped 22% to $10.2 billion.

This REIT closed at $12.35 on Tuesday, September 13. We can snag 2,300 shares of the Northwest REIT for a total price of $28,405. The REIT last paid out a monthly dividend of $0.067 per share, representing a tasty 6.4% yield. This purchase will allow us to make monthly tax-free passive income of $154.10 in our TFSA.

One more stock that is perfect for generating passive income in your TFSA

First National Financial (TSX:FN) is the final dividend stock I’d look to snatch up in our hypothetical TFSA right now. This Toronto-based company originates, underwrites, and services commercial and residential mortgages in Canada. Shares of First National have dropped 9.7% in the year-to-date period.

Shares of First National closed at $38.46 on Tuesday, September 13. In our scenario, we can buy 705 shares of First National for a purchase price of $27,114. First National currently offers a monthly distribution of $0.196 per share. That represents a very strong 6.1% yield. This purchase will allow us to churn out passive income of $138.18 per month in our TFSA.

Bottom line

These investments will allow us to churn out passive income of $411.63 in your TFSA.

The post TFSA Passive Income: Make Over $410/Month 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 NORTHWEST HEALTHCARE PPTYS REIT UNITS and PEMBINA PIPELINE CORPORATION.