New Year, New Income: How to Aim for $300 a Month in Tax-Free Dividends

January makes people want a clean slate. It’s the same with money. You open your banking app, look at your Tax-Free Savings Account (TFSA), and want a plan that feels repeatable. A $300-a-month dividend goal is motivating as it feels like a second paycheque, but it’s also just math. That $300 per month is $3,600 per year. If your portfolio yields about 5% to 7%, you are typically looking at roughly $50,000 to $70,000 invested to get there, before any dividend changes. The trick is building the base, then letting reinvested payouts and contribution room do the heavy lifting over years, not weeks.

T

TELUS (TSX:T) can fit the steady builder role, but it’s not a bond in disguise. It’s a major Canadian telecom selling wireless and internet services people tend to keep paying for even when budgets tighten. The attraction right now is income versus price. TELUS traded near the low end of its past-year range, and its annual dividend rate is about $1.46 per share, which pushed the yield into the 9% area most recently.

What matters is whether that payout supports cash. In TELUS’ most recent reported quarter, the cash story improved. The dividend stock reported about $5.1 billion of operating revenues, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of roughly $1.9 billion, and free cash flow (FCF) of about $611 million. This was helped by lower capital spending than a year earlier. Net income was about $431 million and basic earnings per share (EPS) were $0.32. For income investors, free cash flow is the scoreboard because dividends are paid with cash, not accounting earnings.

The beginner-friendly case for TELUS is that sticky demand plus a high yield can do a lot of work inside a TFSA. The beginner risk is that telecoms carry meaningful debt, pricing competition can be intense, and regulation can shift in ways that pressure margins. TELUS also does not screen as cheap on earnings today, so you’re paying for stability and scale more than you’re paying for a bargain. If you buy it, watch FCF, leverage, and whether the dividend growth plan stays realistic.

PPL

Pembina Pipeline (TSX:PPL) is a dividend engine that pairs well with a telecom as the cash drivers differ. Pembina is a midstream energy dividend stock. It gets paid to move, process, and store hydrocarbons, and much of its cash flow is contract-linked rather than pure commodity price exposure. Its units have been mostly range-bound over the past year.

The latest quarter shows why people buy it. Pembina reported adjusted EBITDA of about $1 billion, cash flow from operating activities of about $765 million, and distributable cash flow of about $719 million, or $1.27 per share. It also reported adjusted net earnings of about $260 million, or $0.46 per share. Management declared $0.69 per share in dividends for the quarter, which annualizes to about $2.76 per share.

The sleep-well angle with Pembina is that if distributable cash flow stays comfortably above the dividend, the payout can hold up even when oil headlines get loud. The flip side is that it is still energy-linked. Project timing, cost overruns, and contract renewals can change the long-term picture, and higher interest rates can weigh on all dividend-yielding stocks. Multiple Bank of Canada cuts would generally be a tailwind for names like this, but it’s not a guarantee if energy volumes or costs disappoint.

Bottom line

Put together, TELUS and Pembina can be a sensible two-stock start for TFSA income, especially if you reinvest while you build. And right now, here’s how you could create $150 per month from an investment in both stocks.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDEND TOTAL ANNUAL PAYOUTFREQUENCYTOTAL INVESTMENTT$17.791,077$1.67$1,798.59Quarterly$19,161.83PPL$51.99633$2.84$1,798. 72Monthly$32,909.67

Now you don’t have to go all in right away. These stocks will not create $300 a month overnight, but they can help you get there with time, discipline, and realistic expectations over decades.

The post New Year, New Income: How to Aim for $300 a Month in Tax-Free Dividends appeared first on The Motley Fool Canada.

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More reading

• The Smartest Dividend Stocks to Buy With $500 Right Now
• Earn $200/Month in Passive Income That the CRA Can’t Tax
• The Least Sexy Stocks for 2026 (Don’t Even Think About Buying These Unless You Want to Make Money)
• Sure, Telus Paused Its Payout: It’s My Newest Top Stock Pick
• 3 Must-Own TSX Stocks Critical to Carney’s Major Project Agenda

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Pembina Pipeline and TELUS. The Motley Fool has a disclosure policy.