The S&P/TSX Composite Index officially fell into a bear market after plunging over 500 points to open the previous week. That means investors have some decisions to make regarding strategy in the weeks ahead. Today, I want to discuss how Canadians can look to generate passive income in the middle of a market correction. In this hypothetical, we’ll look to stash dividend stocks in our Tax-Free Savings Account (TFSA), so those passive income gains will be entirely tax free. Let’s jump in.
This energy stock looks undervalued in the new bear market Keyera (TSX:TSX:KEY) is the first dividend stock I’d look to start up our passive-income portfolio. This Calgary-based company is engaged in the energy infrastructure business. Its shares have dropped marginally in 2022 as of close on June 23. The stock has plunged 13% month over month.
In Q1 2022, Keyera reported adjusted EBITDA of $257 million — up from $225 million in the previous year. Meanwhile, distributable cash flow (DCF) rose to $178 million compared to $165 million in the first quarter of 2021.
This dividend stock closed at $28.62 per share on June 23. In our hypothetical, we’ll snatch up 950 shares of Keyera in our TFSA for a total purchase price of $27,189. Keyera currently offers a monthly distribution of $0.16 per share. That represents a tasty 6.7% yield. This purchase will allow us to generate weekly passive income of $35.07 going forward.
Passive-income investors may want to snatch up this green energy equity for the long haul TransAlta Renewables (TSX:RNW) is a Calgary-based company that develops, owns, and operates renewable power-generation facilities. Shares of TransAlta have declined 11% so far this year. The stock 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 delivered adjusted EBITDA growth of 13% to $139 million. Its cash flow from operating activities was largely flat compared to the previous year.
Shares of TransAlta closed at $16.58 per 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 out a monthly distribution of $0.078 per share, which represents a strong 5.6% yield. That purchase will let us generate tax-free weekly passive income of $28.80 per week with this green energy stock.
One more dividend stock that is perfect for a passive-income portfolio Freehold Royalties (TSX:FRU) is yet another Calgary-based company. It offers oil and gas royalties to its shareholders. This dividend stock has been mostly static in the year-to-date period. Its shares are up 22% year over year. Funds from operations rose to $71.9 million in the first quarter of 2022 — up from $32.4 million in Q1 2021.
This energy stock closed at $12.07 on June 23. For our final purchase, we’ll snatch up 2,300 shares of Freehold Royalties for a purchase price of $27,761. This dividend stock offers a monthly distribution of $0.08 per share, representing a monster 7.9% yield. That means we can generate weekly tax-free passive income of $42.46.
Bottom line These investments will allow us to generate tax-free passive income of $106.33 on a weekly basis. That is a solid takeaway for investors who are sweating out this bear market.
The post Passive-Income Power: How to Make $105/Week TAX FREE in a Bear Market appeared first on The Motley Fool Canada.
Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends FREEHOLD ROYALTIES LTD. and KEYERA CORP.