How to Use Your TFSA to Earn $128 Per Month in Tax-Free Income

Investors looking to build a steady passive-income stream could add high-quality dividend stocks with monthly payouts to their portfolios. Canadian stocks that pay every 30 days can help you manage regular financial obligations while allowing for more frequent reinvestment, thus enhancing overall returns in the long run.

Moreover, Canadian investors can enjoy these dividends without worrying about taxes using a Tax-Free Savings Account (TFSA). Since both capital gains and dividends are shielded from taxation within a TFSA, your earnings can grow unhindered, maximizing the benefits of compounding.

Against this background, here are two fundamentally strong dividend stocks that can help you earn over $128 per month in tax-free income.

SmartCentres REIT stock

SmartCentres REIT (TSX:SRU.UN) is one of the top Canadian dividend stocks offering reliable monthly cash. This real estate investment trust (REIT) owns a defensive real estate portfolio anchored by tenants with essential businesses such as grocery stores, which add stability and ensure consistent cash flow amid all economic conditions. This allows the REIT to consistently enhance its shareholder value through regular payouts.

With 195 mixed-use properties, including high-traffic retail centers, SmartCentres benefits from steady occupancy rates and strong tenant demand. This translates into solid rental income, supporting its payouts and making it a dependable choice for income investors. The REIT offers a monthly dividend of $0.154 per share, reflecting a high yield of 7.4% based on a recent stock price of $25.17 (as of March 18, 2025).

During the last reported quarter (Q4 2024), its occupancy hit a five-year high of 98.7%, with over 200,000 square feet of vacant space leased. Same-property net operating income (NOI) grew 3.8% year over year, and rental spreads (excluding anchor tenants) surged 8.8%, reflecting rising demand and increasing property value. The REIT retained over 91% of tenants in 2024, while cash collections exceeded 99%, reflecting the quality of its lease agreements.

Beyond traditional retail, SmartCentres is evolving into a diversified real estate leader by incorporating medical offices, daycare centres, and fitness facilities, further enhancing its properties’ appeal. Moreover, its expansion into residential, industrial, and self-storage developments strengthens its long-term growth prospects.

With high occupancy, strong tenant retention, solid demand, and a vast land bank for future projects, SmartCentres remains well-positioned to deliver solid NOI, enabling it to maintain and even increase its monthly dividends over the next decade.

Whitecap Resources

Whitecap Resources (TSX:WCP) is another top dividend stock to consider now for your TFSA portfolio. This energy firm acquires, develops, and produces oil and natural gas properties and assets. Thanks to its high-quality portfolio of assets characterized by stable production and minimal base declines, the company generates solid cash flows, supporting its monthly payouts.

Currently, Whitecap pays a monthly dividend per share of $0.061, offering an attractive yield of around 8.1%.

The company’s focus on growing its asset base and driving production, cost control measures, and drilling efficiency support its profitability and monthly payouts. Further, its strong balance sheet and low maintenance capital requirements will enable it to capitalize on opportunities and continue rewarding shareholders. In addition, its strategic mergers and acquisitions enhance its growth prospects, as exemplified by its recent merger announcement with Veren (TSX:VRN).

This move is set to establish Whitecap as a leading player in light oil and condensate production, particularly in resource-rich regions like Alberta’s Montney and Duvernay formations. The company is poised to deliver higher profitability and enhance shareholder value by expanding its assets and streamlining operations.

Earn over $128 in tax-free income every month

SmartCentres REIT and Whitecap Resources are great options for your TFSA if you’re looking to earn tax-free income. As shown in the table, investing $10,000 in each of these stocks via TFSA could generate $128.79 per month in tax-free earnings.