Many Canadians dream of being able to achieve financial independence. If you’ve never heard that term before, it essentially means that you’re able to live without having to depend on your job as your primary source of income. Of course, it could take many years or even decades to achieve this goal. However, I strongly believe that it’s possible for the average person to achieve it eventually.

There are many ways that investors can reach financial independence. One of the easiest ways is by creating a source of passive income. If you’re able to make your money work for you, then chances are, you won’t have to work very hard yourself. Although real estate is one way that many Canadians choose to generate passive income, it can be very hard to enter that market.

Due to the high barrier to entry, most Canadians should focus on dividend stocks. These are stocks that pay shareholders on a recurring basis simply for holding shares in the company. By investing in dividend stocks, you can start generating a passive income today. Some dividend stocks even pay shareholders on a monthly basis, giving them a more stable and consistent income than quarterly dividend stocks.

Finally, by investing in a tax-advantaged account like a Tax-Free Savings Account (TFSA), you can receive all of your dividends tax-free. This could help you live much more comfortably knowing you don’t owe the government anything out of your passive-income source.

In this article, I’ll discuss a great monthly dividend stock that you should consider holding in your portfolio today. This company pays its shareholders on a monthly basis. By holding shares in a TFSA, you could generate a solid source of passive income that could help you live much more comfortably. You could even retire earlier if you continue investing more funds into this stock.

Which stock should you buy today for its monthly dividend?

There are many dividends in Canada that offer investors a monthly dividend. However, in my opinion, Northland Power (TSX:NPI) is one of the most interesting options today. For those who aren’t familiar with this company, know that it operates green power projects across the globe. Northland Power has a presence in North and South America, Europe, and Asia.

Although Northland Power’s monthly dividend is quite small ($0.10) per share, I still think it’s worth buying today. The company offers investors a forward dividend yield of 5.46%, meaning you’ll get great value for your money. At a monthly dividend of $0.10, investors would need 10,000 shares to generate a monthly dividend of $1,000. As of this writing, Northland Power stock trades at $21.98 per share. That means a minimum investment of $219,000 will net you $1,000 per month.

Of course, most Canadians won’t have that kind of money just lying around. However, all you need to do is start today. It may feel rewarding to see your dividend grow over time, helping you stay motivated to keep putting new cash into this outstanding dividend stock.

The post Passive Income: How to Make $1,000 Per Month Tax-Free appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Northland Power?

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* Returns as of 11/14/23

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Fool contributor Jed Lloren has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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