Canadians wrestling with a volatile market have many options. Today, I want to explore the passive-income avenue. Investors who make the right moves will be able to generate enough monthly passive income to sustain themselves in what could turn into turbulent market conditions in the second half of the year. In this instance, I will explore how we can turn $25,000 into monthly passive income above $160. For our hypothetical, we’ll look to generate passive income in a Tax-Free Savings Account (TFSA). Let’s dive in!
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This dividend beast is the perfect first buy for your passive-income portfolio…
Timbercreek Financial (TSX:TF) is a Toronto-based mortgage investment company that provides shorter-duration structured financing solutions to commercial real estate investors in Canada. Shares of this beefy dividend stock have climbed 12% in 2023 as of close on April 12. The stock is still down 12% compared to the previous year.
This company released its fourth-quarter (Q4) and full-year fiscal 2022 earnings on February 22, 2023. In Q4 2022, Timbercreek achieved record net investment income of $31.3 million — up 39% compared to Q4 fiscal 2021. Meanwhile, net investment income rose 21% and reached a record $109 million for the full year. Adjusted distributable income per share increased to $0.79 over $0.74 for the full year in fiscal 2021.
Shares of Timbercreek closed at $8.19 per share on Wednesday, April 12. In our hypothetical, we can look to snatch up 1,545 shares of Timbercreek in our TFSA for a total purchase price of $12,653.55. This stock currently offers a monthly distribution of $0.058 per share. That represents a monster 8.4% yield. This investment now allows us to make monthly passive income of $89.61 in our TFSA going forward.
Shareholders love this dividend stock, and so will passive-income investors!
Freehold Royalties (TSX:FRU) is a Calgary-based company that is engaged in the acquisition and management of royalty interest in the crude oil, natural gas, natural gas liquids, and potash properties in Western Canada and the United States. This energy stock is up marginally so far in 2023. Shares of Freehold have climbed 0.93% year over year.
The oil and gas royalty company put together a fantastic Q4 in fiscal 2022. Indeed, Freehold and its peers have benefited from higher oil and gas prices in the opening months of the 2023 calendar year. In Q4 2022, Freehold delivered total production growth of 6% to 15,041 barrels of oil equivalent per day (boe/d). Funds from operations (FFO) rose to $80.0 million or $0.53 per share compared to $68.8 million or $0.46 per share in Q4 fiscal 2021.
This top energy stock closed at $15.20 per share on Wednesday, April 12. For our hypothetical, we can purchase 810 shares of Freehold Royalties in our TFSA for a total price of $12,312.00. The stock offers a monthly dividend of $0.09 per share, which represents a very strong 7.1% yield. This purchase will allow us to generate monthly passive income of $72.90 in our TFSA to kick off the spring of 2023.
Conclusion
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| TF | $8.19 | 1,545 | $0.058 | $89.61 | Monthly |
| FRU | $15.20 | 810 | $0.09 | $72.90 | Monthly |
These savvy investments will allow us to generate monthly passive income of $162.51. That works out to annual tax-free passive income of $1,950.12. Better yet, this monthly and annual income will be entirely tax free in our TFSA.
