Building a $28,000 TFSA Portfolio One Contribution at a Time

Ever since central banks in the US and Canada started cutting key interest rates, economic activity has picked up pace in both countries. While the rate cuts are currently paused amid trade and geopolitical tensions, analysts predict two more rate cuts of 25 basis points as inflation and tariff-related headwinds ease.

Lower interest rates also mean you cannot generate too much interest income from cash held in high-interest savings accounts. If you have $28,000 of contribution room available in a Tax-Free Savings Account (TFSA), I can tell you a much better way of generating good monthly returns.

The TSX has no shortage of monthly dividend-paying stocks. Building a portfolio of high-quality TSX stocks paying monthly distributions to shareholders can be a great way to generate extra monthly income.

Here’s a table giving you a quick look at how a hypothetical amount of around $28,000 across three such TSX stocks can deliver $144 in monthly dividends in a TFSA without incurring taxes. After that, you can read a bit about each.

Pizza Pizza Royalty

Pizza Pizza Royalty Corp. (TSX:PZA) is a $497.3 million market-cap company that owns and franchises quick-service restaurants under several brands, boasting almost 800 restaurants from one coast to the other. The monthly dividend-paying stock generates revenue by collecting royalties from its franchisees based on how much they sell, making its cash flows less vulnerable to wage increases or commodity price fluctuations, which weigh on many businesses in the industry.

The brands under the company’s banner consistently keep adding value to end consumers by updating menus and using creative brand messaging. The company is also planning to continue to increase its locations. I believe this stock can be a good investment for earning relatively safe monthly dividends.

Sienna Senior Living

Sienna Senior Living Inc. (TSX:SIA) is a $1.7 billion market-cap giant in the senior living space. It is among the largest owners of senior housing facilities in Ontario, servicing the aging population. Occupancy rates are getting higher and higher, and it generates revenue from several business segments catering to different markets within Canada.

As long as the growth in the senior population continues, so will the demand for the services that SIA stock offers. The company ended the first quarter of fiscal 2025 with $445 million in liquidity, indicating that it has more than enough capital to fund monthly dividends and acquire more facilities under its banner. It can be another solid investment to consider for monthly dividends.

SmartCentres REIT

SmartCentres REIT (TSX:SRU.UN) is a Real Estate Investment Trust (REIT) that can help you earn monthly income like a lazy landlord. If you have the cash outlay for stock market investing, you have the ability to invest in the real estate sector, all without the hassle of being an actual landlord.

SRU.UN has a portfolio of almost 200 properties in key locations across the country, with over 95% of its tenants having a regional or national presence. Most of its revenue comes from commercial tenants offering essential services, giving it solid cash-generating opportunities. Boasting an impressive 98.4% occupancy rate, it can be a solid investment.

Foolish takeaway

I feel that you should take any opportunity you can to make more money, and the TFSA gives you the perfect chance to do that. The tax-sheltered nature of the account means you can enjoy the returns from your investments in the account without incurring taxes.

The table at the start paints a picture of what the monthly income might look like with a hypothetical $28,000 across three monthly dividend stocks. Add capital gains in the long term into the mix and your total returns over a few years can be much higher.