Turn Any TFSA Into a Cash-Creating Machine With Just $12,000

The TFSA is a strong way to create passive income, and it’s easy to make even more with this dividend stock.

| More on:
Canadian dollars are printed

Source: Getty Images

Canadians are more anxious about their finances than they’ve been in years. With rising costs and economic uncertainty hanging over everything, it makes sense to look for investments that feel safe and reliable and still deliver steady income. That’s where a dividend stock like SmartCentres Real Estate Investment Trust (TSX:SRU.UN) can make a big difference, especially inside a Tax-Free Savings Account (TFSA).

About SmartCentres

SmartCentres is one of the biggest real estate investment trusts in the country. It specializes in retail properties that are anchored by household names like Walmart, Dollarama, and Loblaw. These tenants are not just stable but essential. That makes SmartCentres different from other retail REITs that rely on fashion outlets or high-end shopping centres. It owns a huge portfolio of nearly 200 properties across Canada and maintains a high occupancy rate, sitting at 98.4% as of its latest quarterly update. This means its tenants are sticking around and paying their rent, which is what matters most for a REIT that depends on rental income.

In its first quarter (Q1) of 2025 earnings report, SmartCentres delivered funds from operations of $0.56 per unit. That was up from $0.48 a year ago, marking a strong gain in operating performance. It also reported that its same-property net operating income rose more than 4% year over year and even more when excluding large anchor tenants.

That kind of growth is encouraging for long-term investors. While its total revenue came in slightly under expectations at around $229 million, the core business remained strong, with rent collection at 99%. The dividend stock also mentioned plans to sell off some less productive assets and reinvest in higher-growth areas, including mixed-use developments with residential units. That suggests a forward-thinking approach to growth while keeping the core business stable.

Earning income

The dividend is the main attraction for most investors. SmartCentres pays a monthly distribution of $0.15417 per unit, which works out to about $1.85 annually. At a recent price of $25.65, that gives a dividend yield of about 7.2%. That’s higher than most guaranteed investment trusts (GICs) and certainly better than a savings account, especially when you factor in the tax-free treatment of income inside a TFSA.

A $12,000 investment in SmartCentres would generate roughly $865 in annual income, with payments arriving every month at around $72.15. That’s meaningful cash flow that doesn’t require selling any shares. And because the payout ratio sits around 84% of funds from operations, the dividend appears well-covered and sustainable.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYTOTAL INVESTMENT
SRU.UN$25.65468$1.85$865.80Monthly$12,001.20

It’s also worth noting that SmartCentres is not a flashy dividend stock. It doesn’t shoot up overnight, and it won’t appeal to people looking for fast gains. But for Canadians who want steady income and a chance at modest growth over time, it’s a strong contender. The trust continues to invest in new projects, including residential towers and mixed-use communities, which could help it grow earnings in the years ahead. These projects add another layer of diversification, reducing reliance on retail alone.

Bottom line

In a world where Canadians are stressed about inflation, recession, and job security, it makes sense to take a conservative approach. SmartCentres is one of the safer REITs on the TSX, backed by high occupancy, strong tenants, and careful management. With a solid monthly income stream, a reliable dividend, and the ability to hold it tax-free inside a TFSA, it becomes a compelling choice. If you’re looking to turn your TFSA into a cash-generating machine without adding risk to your portfolio, putting $12,000 into SmartCentres could be a smart move. It’s not about chasing the highest yield; it’s about building wealth safely and consistently, one dividend cheque at a time.

Fool contributor Amy Legate-Wolfe has positions in Walmart. The Motley Fool recommends SmartCentres Real Estate Investment Trust and Walmart. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Yellow caution tape attached to traffic cone
Dividend Stocks

The CRA Is Watching This January: Don’t Make These TFSA Mistakes

January TFSA mistakes usually aren’t about stocks; they’re about rushing contributions and accidentally triggering CRA penalties.

Read more »

Canadian Dollars bills
Dividend Stocks

The TFSA Paycheque Plan: How $10,000 Can Start Paying You in 2026

A TFSA “paycheque” plan can work best when one strong dividend stock is treated as a piece of a diversified…

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

Retirees, Take Note: A January 2026 Portfolio Built to Top Up CPP and OAS

A January TFSA top-up can make CPP and OAS feel less tight by adding a flexible, tax-free income stream you…

Read more »

senior couple looks at investing statements
Dividend Stocks

The TFSA’s Hidden Fine Print When It Comes to U.S. Investments

There's a 15% foreign withholding tax levied on U.S.-based dividends.

Read more »

young people stare at smartphones
Dividend Stocks

Is BCE Stock Finally a Buy in 2026?

BCE has stabilized, but I think a broad infrastructure focused ETF is a better bet.

Read more »

A plant grows from coins.
Dividend Stocks

Start 2026 Strong: 3 Canadian Dividend Stocks Built for Steady Cash Flow

Dividend stocks can make a beginner’s 2026 plan feel real by mixing income today with businesses that can grow over…

Read more »

senior relaxes in hammock with e-book
Dividend Stocks

2 High-Yield Dividend Stocks for Stress-Free Passive Income

These high-yield Canadian companies are well-positioned to maintain consistent dividend payments across varying economic conditions.

Read more »

Senior uses a laptop computer
Dividend Stocks

Below Average? How a 70-Year-Old Can Change Their RRSP Income Plan in January

January is the perfect time to sanity-check your RRSP at 70, because the “typical” balance is closer to the median…

Read more »