TFSA Investors: How to Turn Your TFSA Into a $1,000/Month Tax-Free Income Stream

Vermilion Energy Inc. (TSX:VET)(NYSE:VET) has a very high dividend yield.

| More on:

I’m sure you would like to receive a passive income of $1,000 per month. Think about what you could do with that extra income. The great news is that you don’t need a TFSA of $1,000,000 to get that: about $100,000 will suffice if you buy dividend stocks yielding around 10%.

The three following stocks have a dividend yield between 8.1% and 14.6%, for an average yield of 12%. By buying an equal amount of each of these stocks in your TFSA, you’ll receive about $1,000 per month tax-free. If you have less than $100,000, you can buy more of the highest yielding stock to reach $1,000. 

Vermilion Energy

Vermilion Energy (TSX:VET)(NYSE:VET) is a Canadian oil and gas producer focused on the acquisition, development and optimization of production properties in North America, Europe, and Australia. The company was founded in 1994 and is headquartered in Calgary.

Vermilion pays a monthly dividend of $0.23 per share, which represents an annualized dividend of $2.76. This is one of the highest yielding stocks trading on the TSX right now, with a dividend yield of 14.6%. The yield has increased quickly, as shares have dropped by 30% over one year. 

Vermilion CEO Anthony Marino has told BNN Bloomberg in an interview that the dividend is safe. The company has been paying a monthly dividend or distribution for 16 years and has never cut it. Marino said that the payout can be maintained through cost efficiency.

Earnings per share are expected to increase next year by 66.7% to $0.45, and by 26.3% on average annually over the next five years. Vermilion has the highest ROE in the oil and gas sector, 14.02% compared to 5.52% for the sector. Its profit margin of 20.41% is higher than the 2.64% of the sector.

In addition, the P/E of the company is 8.4, while the industry averages 19.7. The main difference with Vermilion is that it gets higher prices in Europe for natural gas.

Gamehost

Founded in 2003, Gamehost (TSX:GH) is a leading provider of hospitality and entertainment based in Red Deer County, Alberta. The company’s segments include Gaming, Hotel, and Food & Beverage.

Gamehost operates four main properties in the province of Alberta, each one offering slot machines, table games, superior hospitality and more designed to appeal to casual and dedicated players. Its market capitalization is approximately $200 million.

Similar to Vermilion, Gamehost pays a dividend every month to its shareholders. The amount paid monthly is $0.0575 per share, or $0.69 annually, for a current dividend yield of 8.1%. 

Gamehost’s focus on increasing shareholders’ value is clearly stated in its mission to reduce costs and improve offerings, creating some of the highest profit margins in the business.

While earnings per share are expected to remain flat at $0.48 per share in 2020, they should grow by 4.7% to $0.51 in 2021. Gamehost’s shares are down 8% year to date.

Chemtrade Logistics Income Fund

Chemtrade Logistics Income Fund (TSX:CHE.UN) provides industrial chemicals and removal services in Canada, the United States, and South America.

The company manufactures a range of chemicals as well as ingredients for prescription drugs, nutritional supplements and veterinary products. Chemtrade is the largest supplier of sulfuric acid in North America. The company was founded in 2001 and is headquartered in Toronto.

Chemtrade also pays a dividend each month, which currently amounts to $0.10 per share, representing a $1.20 dividend on an annualized basis. The dividend yield is 13.7%, one of the highest among TSX stocks.

Chemtrade is a reliable dividend payer, as it has paid a monthly distribution every month since 2007.

For fiscal 2020, earnings are expected to increase by about 100% to a small loss of $0.01 per share. The stock has dropped by 15% over one year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Stephanie Bedard-Chateauneuf has no position in any of the stocks mentioned.

More on Dividend Stocks

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Boost Your Passive Income: 2 Canadian High-Yielders at a Bargain

Nutrien (TSX:NTR) stock and another play that appear like fantastic dividend bargains in mid-November.

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

TSX Stocks Soaring Higher With No Signs of Slowing

Three TSX stocks continue to beat the market and could soar higher in an improving investment landscape.

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

Here’s the Average TFSA Balance at Age 44 in Canada

You can invest your TFSA in funds like the BMO Canadian High Yield Dividend ETF (TSX:ZDV) to grow the balance.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

The Best Telecom Stock to Buy Before 2025

Choosing the safest stock from a decimated sector can be tricky, but if there is a reasonable chance of full…

Read more »