I'd Bet My Entire TFSA on This 7.2% Monthly Dividend Stock

I’d Bet My Entire TFSA on This 7.2% Monthly Dividend Stock

This dividend stock is one of the “smartest” out there for those seeking passive income.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published June 5, 2025 4:20 pm EDT

Building passive income doesn’t have to be complicated. Sometimes, the smartest moves come down to one word: consistency. If you’re looking to make your Tax-Free Savings Account (TFSA) work harder, there’s one stock I’d happily bet my entire TFSA on. That’s SmartCentres Real Estate Investment Trust (TSX: SRU.UN). With a massive portfolio of commercial real estate, a monthly dividend, and a yield around 7.2%, this Canadian REIT is built to pay you no matter what the market’s doing.

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills. — Source: Getty Images

About SRU

SmartCentres is best known for its Walmart-anchored shopping centres across Canada. But it’s not just a shopping mall REIT. It’s evolving. What started as a retail-heavy real estate trust has expanded into residential, mixed-use, and self-storage development. It’s growing in ways that make its income stronger and more reliable.

As of writing, SmartCentres trades around $25.86 per unit, giving it a yield of approximately 7.2%. That dividend is paid monthly, which is music to the ears of anyone looking to generate regular cash flow in retirement, or just supplement income now. If you invested $70,000, you’d be looking at about $417.18 per month in tax-free income, or over $5,000 annually. And if you’ve built up more contribution room in your TFSA, those numbers just grow.

COMPANY	RECENT PRICE	NUMBER OF SHARES	DIVIDEND	TOTAL PAYOUT	FREQUENCY	INVESTMENT TOTAL
SRU.UN	$25.86	2,706	$1.85	$5,006.10	Monthly	$69,977.16

Digging deeper

But what about the business itself? SmartCentres reported its first-quarter 2025 earnings in early May. The numbers show a dividend stock that’s steady, even in a higher-interest-rate world. It reported net rental income of $145.3 million, up from $139.2 million a year prior. Funds from operations (FFO), a key metric for REITs, came in at $0.56 per unit, slightly ahead of expectations. Occupancy sits near 98%, which is incredibly high for a REIT of this size.

One of the best parts of SmartCentres is its long-standing relationship with Walmart. Roughly 25% of its rental income comes from Walmart locations, which helps stabilize cash flows even when other retailers falter. If you’re going to rely on monthly income, it helps when the source is one of the largest companies in the world. This anchor strategy is a major reason why SmartCentres maintained strong results even when many shopping centre landlords struggled.

But it’s not just about retail anymore. The REIT is in the midst of a multi-billion-dollar transformation. Its SmartLiving brand is building residential projects in places like Vaughan, Laval, and Ottawa. There’s also SmartCentres’ push into self-storage, retirement residences, and even industrial warehouses. These projects are starting to generate revenue now and will become a growing portion of income in the years ahead. So while you’re getting paid a healthy dividend today, there’s real potential for value growth tomorrow.

Bottom line

Of course, all investments come with risk. Rising interest rates make it more expensive for REITs to borrow for development. Commercial real estate valuations have been under pressure as cap rates adjust. But SmartCentres has managed this risk well. Its debt is staggered, with many maturities not hitting until 2027 or later. It also has a strong interest coverage ratio and $1.1 billion in liquidity to keep operations flexible.

The bigger risk might be missing out. A 7.2% yield from a reliable Canadian company is hard to find, especially one that pays monthly. If you’re using your TFSA to build tax-free income, this kind of compounding can be powerful. Reinvest those dividends and you’re looking at even stronger growth over time.

So, would I bet my entire TFSA on SmartCentres? If I were building a portfolio for stable, growing income, it would absolutely be near the top of the list. The mix of dependable cash flow, strategic growth, and monthly distributions is rare. And for investors tired of the ups and downs of the market, there’s something comforting about seeing that cash land in your account like clockwork.