The Tax-Free Savings Account (TFSA) is good for wealth creation, but you can also convert your TFSA into a source of lasting income. It all depends on your investment needs. Unlike the Registered Retirement Savings Plan (RRSP), which has an age limit of 71 years, the TFSA has no age limit. As long as you are over 19 years old, you can contribute to a TFSA. The 2025 TFSA contribution is $7,000 for a 19-year-old and a 79-year-old, irrespective of income bracket.
How retirees can turn their $7,000 TFSA contribution into an income stream
If you are near retirement or have retired, you can build an emergency fund in your TFSA as withdrawals are tax-free. You can also create a lasting income stream to help you fight inflation and unexpected expenses.
Here are a few stocks for your consideration.
Stocks that provide a monthly income stream in a TFSA
Real estate stocks associated with retail stores are a good investment for monthly income, as they tend to attract higher rent.
Slate Grocery REIT (TSX:SGR.UN) owns and leases a US$2.4 billion retail real estate portfolio in the United States. Supermarkets and groceries contribute to 46% of its rental income. These stores tend to do well in all economic conditions. Two of its largest tenants are Walmart and Kroger, which means the rental income is assured.
The REIT earns rent in US dollars but pays monthly distributions to Canadians in Canadian dollars. In the current economic scenario of a trade war, you can earn a higher income as the US dollar strengthens.
Now is a good time to invest in the stock and lock in an 8.1% yield. A $2,000 TFSA investment can start earning a $13.50 monthly income from next month onwards.
CT REIT (TSX:CRT.UN) is a safe investment for retirees as the majority of the rent comes from Canadian Tire. The retailer is revamping its growth strategy to boost sales in the current environment in which consumers are spending frugally. The growth strategy involves the opening of new stores, and CT REIT will be given the first preference to carry out the development.
CT REIT increases its cash flow by increasing rent by 1.5%, adding new stores, and intensifying existing stores. The REIT passes on the cash flow to unitholders and has increased distributions by 3% for the last 10 years. A $2,000 TFSA investment can start earning a $9.95 monthly income from next month.
Stocks that provide a quarterly income stream
For emergencies, you can consider stocks that pay quarterly dividends. Telus (TSX:T) passes on a portion of its cash flow from subscriptions to shareholders as dividends. Every year, subscriptions grow as it increases subscriber count and average revenue per user (ARPU). It has been paying dividends for 25 years and growing them annually by 7–10%.
However, the company has reduced its dividend growth rate to 3–8% for the 2026–2028 period. This is because regulatory changes have increased price competition, and reduced immigration numbers have slowed new subscriptions, thereby slowing its ARPU.
Despite these challenges, Telus can pay a 7.6% yield and grow your income to adjust for inflation. A $2,000 investment can earn $38.30 in TFSA quarterly income from January onwards.
Canadian Natural Resources (TSX:CNQ) is a quarterly dividend stock that has been growing its dividend by an average annual rate of 23% for 24 years. CNQ generates cash flow by selling its natural gas and crude oil at market prices. It increases cash flow despite oil and gas price fluctuations by increasing production and shifting its product mix to higher-margin Synthetic Crude Oil.
It is a good investment that can pay a 5% dividend yield. A $2,000 investment can start earning $25.20 in TFSA quarterly income from October onwards.
Investor takeaway
You can allocate the $7,000 investment depending on the frequency of the payouts. Monthly income stocks can help cover daily expenses and provide quarterly payouts for those unexpected emergencies.
