Canadians: Invest $100 a Month and Get $150 Monthly in Passive Income

Passive-income seekers: If you are sitting on some cash or have some contribution room left in your TFSA, consider putting it in TSX stocks.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Even though the title sounds like a ploy, one can actually make it happen. All that I’m highlighting here is the power of compounding and disciplined investing.

The Canada Revenue Agency will tax you no matter how you earn your wealth. However, the Tax-Free Savings Account (TFSA) is one convenient option Canadians have where your money can grow tax-free. You can use the TFSA to fulfill your financial goals like buying a house or travelling the world or even saving for your sunset years.

Disciplined investing in the TFSA will go a long way

So, an orderly investment in your TFSA will create a huge retirement reserve over the long term. When it comes to compounding, time plays an important role than the absolute value of the investment.

Let’s say you save $100 monthly and invest it in a safe TSX stock like TC Energy (TSX:TRP)(NYSE:TRP) for, say, 15 years. Based on its average historical returns, the investment will accumulate around $35,200 in 15 years.

It will start paying dividends every quarter since your first investment. The longer the investment duration, the bigger the reserve, and the higher the payouts will be.

TC Energy has been paying consistent dividends for more than two decades. Based on its current dividend yield, the reserve of $35,200 will generate annual dividends of $1,948 (or $160 per month) after 15 years. The dividends and principal investment value will keep increasing every year, as the company grows its profits.

Stock markets are not that risky as some perceive. Investors normally shun stock markets, as they over-assume the risk. However, there are plenty of options that offer safety along with decent gains.

TC Energy is an energy pipeline company that connects North America’s oil producers and refiners. Some might think that it is a risky company, as it belongs to the notorious energy sector.

But interestingly, not all energy companies are equally risky. Pipeline companies earn fixed fees on their long-term contracts. So, a large portion of their earnings is not exposed to volatile crude oil prices.

Focus on stability

Another low-risk stock for such a strategy is BCE (TSX:BCE)(NYSE:BCE). It has delivered relatively better returns than TC Energy stock in the last decade. Suppose you invest $100 a month in BCE stock for 15 years. It will create a reserve of $44,700, based on historical returns.

It currently yields 6%. So, a reserve will pay you $2,680 in dividends every year. That’s $223 per month. A higher initial investment or a longer duration will remarkably increase payouts in the later years.

Telecom companies like BCE are mature and stable ones. You will hardly see large swings in these stocks as you see in risky, growth stocks. BCE generates stable cash flows, which enables stable dividends.

The Foolish takeaway

With stocks like BCE or TC Energy, one does not have to worry about market downturns or recessions. They deliver stable stock appreciation and dividends, irrespective of broad market direction.

If you are sitting on some cash or have some contribution room left in your TFSA, consider putting it in such stocks. They will not only give you tax-free gains but will also generate passive income for a lifetime.

Should you invest $1,000 in BCE right now?

Before you buy stock in BCE, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and BCE wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Vineet Kulkarni has no position in any of the stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

grow money, wealth build
Dividend Stocks

Why I’d Invest $10,000 in This Undervalued Dividend-Growth Stock for Decades of Income

This undervalued dividend stock offers a high yield of over 8% and can help you earn more than $200 in…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Here’s Exactly How a $20,000 TFSA Could Potentially Grow to $200,000

Index funds like the iShares S&P/TSX Capped Composite Index (TSX:XIC) are tax free in a TFSA.

Read more »

Dividend Stocks

How I’d Invest $6,000 in Canadian Real Estate Stocks to Build Lasting Wealth

Canadian REITs on sale! See how grocery-anchored retail properties offering 9% yields could turn $6,000 into lasting wealth despite US…

Read more »

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

Economic Headwinds: Should You Still Consider Buying the Dip?

A market dip might seem like a bumpy road, but it can be far smoother in the future with the…

Read more »

e-commerce shopping getting a package
Dividend Stocks

Consumer Spending Plays Amidst the Current Market Dip

Consumption may go down in market dips, but certain consumer stocks are certainly better off than others.

Read more »

Asset Management
Dividend Stocks

12% Dividend Yield! I’m Buying This TSX Stock and Holding for Decades

Stocks with high-dividend yields carry risks. But they could be a good long-term investment. Here is a 12% dividend stock…

Read more »

Canadian flag
Dividend Stocks

How I’d Build a Foundation of Canadian Value Stocks in My Investment Strategy

Canadian investors can explore iShares Canadian Value Index ETF for value stock ideas to build a foundation for their diversified…

Read more »

Canadian dollars are printed
Dividend Stocks

How I’d Transform a $30,000 TFSA Into a Cash-Flow Machine

Here's why TFSA investors should consider owning dividend stocks such as Mullen Group in 2025.

Read more »