TFSA Investors: $63,500 in This REIT Pays $4,286 in Tax-Free Income Each Year!

If you’re looking for steady tax-free income in your TFSA, Northwest Healthcare Properties Real Estate Investment Trust (TSX:NWH.UN) could be a solid pick.

If you’re looking for high income in your TFSA, REITs can be excellent choices.

Although they don’t always deliver frothy capital gains, their dividend yields are typically higher than the TSX average.

According to a CIBC report dated October 3, Canadian REITs have an average yield of 6%. By contrast, the TSX as a whole has an average yield of 2.53%. That means that by buying into a diversified portfolio of REITs, you can get more than twice the income you’d get by buying the TSX.

With certain individual REITs, you can get even higher yields than that. Although the average REIT yield of 6% is already absurdly high, there are plenty of individual REITs pushing 7%. In this article, I’ll explore one whose high occupancy rates and unique niche make its distribution especially high — and safe!

Northwest Healthcare Properties

Northwest Healthcare Properties REIT (TSX:NWH.UN) is a healthcare-focused REIT that leases space to hospitals, health clinics, and healthcare administrative facilities.

The REIT’s unique industry focus give it high occupancy rates and access to very dependable, long-term tenants. The healthcare industry is well known for its stability. So, it’s no surprise that Northwest Healthcare is good at attracting and keeping tenants.

In its most recent quarter, the REIT’s occupancy rate was 97.2%, up from 96.8% in the prior quarter. An improvement in this metric is highly encouraging, especially at a time when investors are worried about “the death of retail” crushing occupancy rates for other REITs.

A high and stable yield

Northwest Healthcare’s units pay monthly distributions of $0.067, which add up to $0.8 per unit annually. As of this writing, that gave a yield of 6.75%. Thanks to this high yield, if you invested your entire $63,500 worth of TFSA contribution room in nothing but NWH.UN, you’d earn $4,682 in tax-free income per year. That’s paid monthly, too, so you’d enjoy a higher frequency of payouts than you’d get with most income-bearing investments.

Excellent financial and operating results

In its most recent quarter, Northwest Healthcare released a number of excellent financial and operating metrics.

These include $31 million in funds from operations (up 19%), $70 million in operating income (up 1.5%), and $49 million in net income (up from a $57 million loss). Additionally, the REIT reduced its debt-to-book-value ratio while maintaining its dividend.

These results show that Northwest Healthcare is growing and delivering value to shareholders while working to keep its balance sheet in good shape.

Foolish takeaway

If you’re an income-oriented investor, REITs are some of the best securities to consider. Offering some of the highest yields on the TSX, they can deliver a solid wallop of cash — usually paid monthly.

Among REITs, Northwest Healthcare is one of the most stable, owing to its dependable healthcare clientele and high occupancy rates. It’s definitely one for any income-oriented investor to consider.

Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS.

More on Dividend Stocks

horses compete to win race
Dividend Stocks

Telecoms Were Monday’s Worst TSX Sector: This One Yields 4.5%

Rogers offers a meaningful dividend yield, with debt reduction providing the clearest test of the investment case.

Read more »

Blocks conceptualizing the Registered Retirement Savings Plan
Dividend Stocks

Which Account Should You Fill First for Retirement?

Not sure whether to fund your TFSA, RRSP or FHSA first? Here's a simple order for Canadians, plus how a…

Read more »

A woman shops in a grocery store while pushing a stroller with a child
Dividend Stocks

An Ideal TFSA Stock for Retirees, Paying 5.2% Each Month

Here's why this popular Canadian real estate stock is one of the best picks for retirees inside their TFSAs.

Read more »

Hand Protecting Senior Couple
Dividend Stocks

A 4.8% Dividend Stock for Monthly Retirement Income

Sienna Senior Living pays $0.08 a share every month, about a 4.8% yield. See Q2 2026 growth, payout safety and…

Read more »

woman relaxes with phone
Dividend Stocks

BCE Earnings Preview: Is the Dividend Still the Main Event?

BCE’s Q3 2026 results will reveal whether its shift from dividend growth to debt reduction is delivering meaningful financial progress.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

This 2% Monthly Payer Is the One Stock I’d Never Sell

Supported by strong fundamentals, favourable industry tailwinds, and promising growth prospects, Savaria offers long-term investors the potential for capital appreciation…

Read more »

woman looks at iPhone
Dividend Stocks

Is Telus’s New Dividend Safe? What $10,000 Would Earn You Today

Here’s why Telus’s new dividend looks more sustainable and why the cut could make the stock a better long-term investment.

Read more »

A glass jar resting on its side with Canadian banknotes and change inside.
Dividend Stocks

How Much Emergency Money Do Canadians Actually Need?

Generally, aim for 3–6 months of essential living expenses for your emergency money. For those with more variability in their…

Read more »