Power of Passive Income: How to Earn $105/Week Tax Free in a Bear Market

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The S&P/TSX Composite Index officially fell into a bear market after plunging more than 500 points to open the previous week. This means that investors have decisions to make regarding the strategy in the coming weeks. Today I want to discuss how Canadians can look to generate passive income in the midst of a market correction. In this scenario, we will be looking to store dividend-paying stocks in our Tax-Free Savings Account (TFSA), so these passive income gains will be entirely tax-free. Let’s go.

This energy stock looks undervalued in the new bear market

Keyera (TSX: KEY) is the first dividend stock I would look to start our passive income portfolio. This Calgary-based company is active in the field of energy infrastructure. Its shares fell slightly in 2022 at the June 23 close. The stock plunged 13% month-on-month.

In the first quarter of 2022, Keyera reported adjusted EBITDA of $257 million, compared to $225 million the prior year. Meanwhile, distributable cash flow (DCF) reached $178 million, compared to $165 million in the first quarter of 2021.

This dividend-paying stock closed at $28.62 per share on June 23. In our hypothesis, we will recover 950 shares of Keyera in our TFSA for a total purchase price of $27,189. Keyera is currently offering a monthly distribution of $0.16 per share. This represents a tasty yield of 6.7%. This purchase will allow us to generate a weekly passive income of $35.07 in the future.

Passive income investors may want to grab this long-term green energy capital

TransAlta Renewables (TSX: RNW) is a Calgary-based company that develops, owns and operates renewable energy generation facilities. TransAlta shares have fallen 11% so far this year. The title is down 20% compared to the same period in 2021.

The company released its first quarter 2022 results on May 4. Free cash flow increased 9% year over year to $108 million. Meanwhile, it posted adjusted EBITDA growth of 13% to $139 million. Its cash flow from operating activities remained largely stable compared to the previous year.

Shares of TransAlta closed at $16.58 a share on June 23. In this scenario, we can buy 1,600 shares at a total purchase price of $26,528. TransAlta Renewables last paid a monthly distribution of $0.078 per share, representing a strong return of 5.6%. This purchase will allow us to generate a weekly non-taxable passive income of $28.80 per week with this stock of green energy.

Another Dividend Stock Perfect for a Passive Income Portfolio

Freehold royalties (TSX:FRU) is another Calgary-based company. It offers oil and gas royalties to its shareholders. This dividend stock has been mostly static over the year-to-date period. Its shares are up 22% year over year. Funds from operations reached $71.9 million in the first quarter of 2022, compared to $32.4 million in the first quarter of 2021.

This energy stock closed at $12.07 on June 23. For our last purchase, we will take 2,300 shares of Freehold Royalties for a purchase price of $27,761. This dividend-paying stock offers a monthly distribution of $0.08 per share, which represents a monster yield of 7.9%. This means that we can generate a tax-free weekly passive income of $42.46.

At the end of the line

These investments will allow us to generate tax-free passive income of $106.33 on a weekly basis. This is a good point to remember for investors sweating this bear market.

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