TFSA Investors: 2 of the Best Monthly Dividend TSX Stocks to Buy Right Now

Create a monthly tax-free income stream in your TFSA by investing in these two TSX dividend stocks that pay investors on a monthly schedule.

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Stock market investing can help you achieve various financial goals, from wealth growth through capital gains to creating a passive-income stream. Creating more income streams to supplement earnings through your primary revenue stream is essential to gaining financial freedom. You can achieve that goal through dividend investing by identifying the right stocks.

Several high-quality stocks pay investors, distributing a portion of revenues to shareholders every quarter. However, several TSX stocks pay their shareholders distributions every month. While not every monthly dividend stock is an excellent pick, a few of them can make excellent parts of the foundation for a solid income-generating, self-directed investment portfolio.

Today, I will discuss two monthly dividend stocks I would have as my foremost picks to kickstart such a portfolio.

Exchange Income

Exchange Income (TSX:EIF) is a $2.20 billion market capitalization Winnipeg-headquartered corporation. The acquisition-focused company focuses on opportunities in the aviation and aerospace industries.

It generates revenue by investing in well-established, profitable companies with solid cash flows operating in niche markets. With the aerospace sector in recovery, EIF stock and companies in this sector have seen share prices climb.

The management of EIF stock anticipates full-year 2023 levels to reach up to $630 million in earnings before interest, taxes, depreciation, and amortization (EBITDA).

As aircraft demand continues to rise this year, the need to provide equipment to build new aircraft and service existing aircraft will likely grow the company’s revenue. As of this writing, EIF stock trades for $46.62 per share, boasting an annualized 5.66% dividend yield that it pays out at a monthly schedule.

Dream Industrial REIT

Dream Industrial REIT (TSX:DIR.UN) is a $3.87 billion market capitalization giant in the real estate sector. The real estate investment trust (REIT) is an unincorporated, open-ended trust. Its portfolio primarily consists of industrial properties throughout Canada and the U.S.

The industrial sector has been performing well amid the rise of the e-commerce industry. By generating revenue through industrial properties, Dream REIT has managed to perform well even amid harsh economic environments.

While high interest rates and inflation have weighed on the trust’s earnings, it has fared well over the last year and a half. Interest rates are expected to fall sometime this year.

Along with cooling inflation, a boost to the industrial sector can spell great news for the company and its investors. As of this writing, Dream REIT trades for $13.55 per share, paying its shareholders their monthly distributions at a 5.16% annualized dividend yield.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Dream Industrial REIT made the list!

Foolish takeaway

If you have room available in your Tax-Free Savings Account (TFSA), you can create a monthly passive-income stream that does not incur income taxes. Any interest, capital gains, or dividend earnings from investments held within a TFSA are tax-free.

If you reinvest the dividend income to buy more shares, you can accelerate your wealth growth by leveraging the power of compounding. After growing your holdings to a sizeable amount, you can generate substantial monthly income to supplement your active income.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Dream Industrial Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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