How to Use $10,000 to Transform a TFSA Into a Cash Machine

Do you want growth and income? Consider these top investments that offer up monthly income in spades!

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 20, 2025 9:45 pm EDT

| More on: FRUSRU.UN

With Canadians facing rising costs and tighter budgets, many are rethinking how to grow their savings. That makes the idea of building a cash-pumping Tax-Free Savings Account (TFSA) more appealing than ever. If I had $10,000 to work with today, I’d aim to build a portfolio that offers regular, reliable income without a lot of upkeep. That’s why I’d split the investment between Freehold Royalties (TSX:FRU) and SmartCentres REIT (TSX:SRU.UN).

Canadian dollars are printed — Source: Getty Images

Freehold

Freehold Royalties is a Canadian energy company that owns land and collects royalties from oil and gas operations on that land. It doesn’t drill or operate wells, which keeps costs low. Instead, it earns income based on the production happening on its properties. That structure means Freehold still benefits from higher energy prices but avoids many of the risks that come with operating in the field.

As of its latest earnings report, Freehold reported revenue of $86.6 million and net income of $56.3 million. Earnings per share (EPS) came in at $0.23, matching results from the same quarter last year. It currently trades around $12.75 per share and offers a monthly dividend of $0.09. If I invested $5,000 into Freehold today, I’d earn roughly $421 in annual income, all tax-free inside a TFSA.

SmartCentres

SmartCentres REIT offers another way to collect consistent income. It owns and manages shopping centres across Canada, many of which are anchored by grocery stores, pharmacies, and big-box retailers like Walmart. These tenants help create stable, long-term cash flow. In uncertain economic conditions, properties like this tend to hold their value and provide steady rent.

In the first quarter of 2025, SmartCentres reported revenue of $228.6 million and net income of $7.9 million, reversing a loss from the same period in 2024. The real estate investment trust pays a monthly distribution of $0.15417 per unit, translating to about $1.85 annually, with a recent share price at $25.50. A $5,000 investment here would bring in just over $360 per year in tax-free income.

A winning pair

What I like about this mix is the balance between sectors. Freehold is exposed to energy markets, which can be volatile, but the royalty structure provides downside protection. SmartCentres is tied to retail, but with its essential-service tenants, it’s more resilient than many other commercial real estate plays. Together, they smooth out the bumps and keep cash flowing.

With $10,000 split evenly between the two, I could generate about $780 in annual tax-free income. That’s more than $65 a month! With plenty of potential for those payouts to grow over time. Both companies have histories of adjusting their payouts as conditions improve. So, if commodity prices rise or rental income increases, the dividend cheques could grow, too.

COMPANY	RECENT PRICE	NUMBER OF SHARES	DIVIDEND	TOTAL PAYOUT	FREQUENCY	INVESTMENT TOTAL
FRU	$12.79	390	$1.08	$421.20	Monthly	$4,990.20
SRU.UN	$25.59	195	$1.85	$360.75	Monthly	$4,993.05

What makes this even more appealing is that the income arrives monthly. That’s helpful for budgeting or reinvesting. In a TFSA, reinvested income can help compound returns faster since none of it gets eaten up by taxes. Over time, the portfolio could grow not just from dividends but also from capital appreciation if the share prices rebound.

Bottom line

Of course, no investment is without risk. Energy markets fluctuate, and retail real estate can be sensitive to economic shifts. But both Freehold and SmartCentres have proven they can manage through different conditions. Each stayed profitable, paid distributions, and kept investors in the game.

For Canadians looking to stretch every dollar and build a financial cushion, this approach makes sense. It’s simple, stable, and focused on regular income. With mortgage payments on the rise and the cost of living climbing, having monthly income from solid Canadian stocks can offer some real peace of mind.

If I had $10,000 to invest today, I wouldn’t chase risky growth. I’d look to Freehold and SmartCentres to build a TFSA that works as hard as I do. With consistent payouts and room to grow, this duo could turn a modest sum into a powerful cash machine for years to come.