PZA:CC - TFSA Investors: How to Earn $100 Each Month for Retirement

2023-09-18 15:30:00 ET

The Canadian government initiated the TFSA (tax-free savings account) in 2009 to encourage Canadians to save more for retirement. It allows investors to earn tax-free returns on a specified amount called contribution room. For this year, the Canadian Revenue Agency has fixed the contribution room at $6,500, while the cumulative amount since 2009 would be $88,000.

So, if you have savings of around $15,000, you can utilize that to earn a passive income of over $100 every month by investing that amount equally in the following three monthly-paying dividend stocks .

Pizza Pizza Royalty

One of the safest and high-yielding dividend stocks would be Pizza Pizza Royalty ( TSX:PZA ) due to its highly franchised business model. The company, which owns Pizza Pizza and Pizza 73 brands, collects royalties from its franchisees based on their sales, thus shielding its financials against higher prices and wage inflation. Its solid same-store sales growth and the opening of new restaurants have driven its royalty income and cash flows. Amid its healthy cash flows, the pizza franchise has raised its monthly dividend seven times since April 2020. PZA stock pays a monthly dividend of $0.075/share, translating its forward yield to an attractive 6.35%.

Meanwhile, Pizza Pizza Royalty is focusing on menu innovations, promotional activities, and renovating its old restaurants to support its same-store sales growth. Besides, it is expanding its restaurant network, with plans to increase its restaurant count by 3-4% this year. Considering its solid underlying business and growth prospects, I believe its future payouts are safe, making it an attractive buy.

Northwest Healthcare Properties REIT

Another high-yielding monthly-paying dividend stock would be Northwest Healthcare Properties REIT ( TSX:NWH.UN ), which manages around 231 properties across eight countries. The company enjoys a high occupancy and collection rate due to its highly defensive healthcare properties, long-term lease agreements, and government-supported tenants. Besides, its inflation-indexed rent protects its financials from rising prices.

However, the healthcare REIT has been under pressure this year due to a surge in its debt levels and increased interest rates. The sell-off has dragged its valuation down to attractive levels, as NWH.UN trades at 0.7 times its book value. Further, the REIT is strengthening its financial position by selling non-core assets and lowering its stake in several joint ventures. The company uses the net proceeds from these initiatives to pay off higher interest-bearing loans. With a monthly dividend of $0.06667/share, NWH.UN shares currently offer a healthy yield of 11.7%.

Extendicare

Extendicare ( TSX:EXE ), with a monthly dividend of $0.04/share and a forward yield of 7.68%, would be my final pick. Last month, the care services provider posted an improved second-quarter performance, with the average daily volume of its home healthcare segment growing by 4.1% while the occupancy rate of its LTC (long-term care) increased by 60 basis points. Driven by the solid operating metrics, the company’s revenue grew 3.7% while its adjusted net operating income increased by $1.6 million.

Meanwhile, Extendicare recently announced the formation of a joint venture with Axium Infrastructure. The joint venture will acquire four Class C home redevelopment projects from Exendicare for $147.3 million. Besides, the company recently acquired 56 LTC (long-term care) homes with around 7,000 beds from Revera. So, these initiatives could allow the company to strengthen its position in the expanding long-term care market amid a growing aging population. Given its healthy growth prospects and attractive dividend yield, Extendicare would be an ideal buy for income-seeking investors.

The post TFSA Investors: How to Earn $100 Each Month for Retirement appeared first on The Motley Fool Canada .

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust. The Motley Fool has a disclosure policy .

2023