Collect Over $300 a Month in Passive Income in Your TFSA With These Stocks
The Motley Fool
Published May 17, 2019 07:32
The Tax-Free Savings Account (TFSA) tends to attract praise as a fantastic vehicle for growth-oriented investors. The TFSA has made many fortunes since its inception in 2009, but it is also attractive as an income vehicle. Today, we are going to look at three stocks to scoop up in your TFSA. These equities combined can net investors over $300 per month in tax-free passive income.
Shaw Communications (TSX:SJR.B)(NYSE:SJR) Shaw Communications is a Calgary-based company that serves as one of the largest telecommunications providers in Western Canada and in northern Ontario. Shares have climbed 9.2% in 2019 as of close on May 16. The stock is up 3.3% from the prior year.
Back in December, I’d argued that telecoms were a solid target with central banks looking to pump the brakes on interest rate hikes. A pull away from bonds would see utilities, telecom, and other steady dividend stocks come back into favour. Shaw and other Canadian telecoms are great targets for income investors right now.
Shaw last paid out a monthly dividend of $0.09875 per share. This represents a 4.3% yield. In our hypothetical scenario, a TFSA investor would commit a third of their maxed-out portfolio to Shaw. At its current price, the investor could purchase 777 shares of Shaw for $20,979. This would amount to a monthly dividend payment of $76.
Freehold Royalties (TSX:FRU) Freehold Royalties is a Calgary-based company that aims to acquire and manage oil and gas royalties. Shares of Freehold have climbed 6% in 2019 as of close on May 16. The stock is down 35% year over year.
Freehold is attractive for income investors because of its strong balance sheet, which has supported its dividend over the years, even in a turbulent energy sector. In the first quarter, the company generated funds from operations of $29.3 million, or $0.25 per share, which was well above its dividend-per-share levels of $0.1575. This extra room allowed Freehold to pay down about $12 million in net debt.
In the first quarter, Freehold declared a monthly dividend of $0.0525 per share. This represents a tasty 7.1% yield. If investors were to pick up 2,394 shares of Freehold at $8.77 per share worth $20,995, they would collect a monthly dividend of $125.
Bird Construction (TSX:BDT) Bird Construction is a Mississauga-based company that operates in the competitive construction market. Shares had dropped 9.5% week over week as of close on May 16. Bird suffered a post-earnings dip after a May 7th quarterly report.
Get The App
The company reported a net loss of $6.5 million on construction revenue of $261.8 million in the first quarter. Earnings and revenue were dragged down by harsher-than-expected winter conditions in central Canada. This hurt productivity and forced delays. Bird did see its adjusted EBITDA loss shrink to $3.1 million compared to a $5.2 million loss in Q1 2018.
The board of directors declared monthly dividends of $0.0325 per share into July 2019. This represents an attractive 6.9% yield. In our hypothetical scenario, investors could snag 3,756 shares of Bird at $5.59 per share as priced after market close on May 16. This would net investors a $122 monthly payment.
Altogether, these three equities could net investors over $320 per month in their TFSA.
Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. Freehold Royalties is a recommendation of Dividend Investor Canada.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019
This Article Was First Published on The Motley Fool
Written By: The Motley Fool
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.