3 ways to make $ 10,000 a year with a $ 100,000 TFSA


2019 can prove the "year of income investing." After the end of 2018, 11.6% decline, the TSX could or could not recover this year, but the fact is that the dividend investing is a way of income regardless of what the market does. For long-term investors – such as seeking to build wealth in a TFSA or RRP – dividend investing is particularly attractive, as this is the best game for a long time frame.

And now it may be one of the best times in years to invest in dividend stocks. If prices fall without a corresponding drop in earnings, then dividend stocks become more lucrative, as well as a lower price plus an unpaid payout yields a higher yield.

Right now, some TSX stocks are so cheap that their yields are approaching 10%. This means that you can make up to $ 10,000 a year with these securities (Tax free, if you own them in a TFSA). But to make that kind of money with no strings attached, you need the right strategy. In this article, I will review three strategies to get to $ 10,000 per year With just $ 100,000 in your TFSA. We can start with the most obvious approach.

Strategy # 1: High yielding investment

The simplest way to jack up your TFCA is to invest in high dividend stocks. One stock right now close to 10% right now TransAlta Renewables (TSX: RNW), which gave 9.03% at the time of writing. All it would take a short fall into the stock price for a $ 100,000 position in Transalta to bear $ 10,000 a year. That is, Transalaulta has a payout ratio of 134%, which means that the dividend can be cut. To really ensure your din $ 10,000 per year I'm sure you need to try a strategy that takes a little more patience.

Strategy # 2: High growth investing

Investing in stock that has lower but faster-growing dividend payouts can be a safer path to $ 10,000 than picking high-yield stocks. Stocks with exceptional high yields often face financial issues that result in their dividends being cut. However, if you buy a lower-ailing, financially healthy stock, you can see the dividend grow to a rate that will pay you $ 10,000 a year down the line.

One such stock is Fortis (TSX: FTS) (NYSE: FTS), which currently only offers 4% but has a 44-year dividend increase streak. A $ 100,000 entry into Fortis today can easily pay $ 10,000 a year 20 years from now. Is it a long time to wait? Sure. But if you invest in retirement, it is also worth the wait.

Strategy # 3: Dividend Cleansing

Last but not least, we get to the strategy of dividend reinventing. This is where you use the dividends you want to buy more stock you bought. Dividend reinstatement increases payouts gradually increasing the size of your stake without adding more money to your TFSA. This strategy takes time off, but when combined with increasing payouts – like the ones seen with Fortis – it can easily get $ 10,000 a year with a stock yielding just 4% now.

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Fool contributor Andrew has no position in any of these accounts.

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