Turn Your TFSA Into an $111/Month Tax-Free Income Stream

If you want to turn your Tax-Free Savings Account (TFSA) into an income stream, consider investing in top dividend stocks. Moreover, adding Canadian stocks that distribute dividends monthly will lead to frequent payouts, enabling you to reinvest more often or use the dividends to cover regular expenses.

With this backdrop, let’s look at two TSX stocks that can help generate $111/month in tax-free income.

Northwest Healthcare

TFSA investors planning to generate a reliable monthly income could consider adding Northwest Healthcare (TSX:NWH.UN) to their portfolio. Specializing in high-quality healthcare real estate, the REIT operates a diverse portfolio that includes hospitals, medical office buildings, and outpatient facilities across Canada and international markets.

Healthcare real estate is considered defensive due to its essential nature and stable tenant base. Northwest’s tenants, often hospital operators or government-supported medical practitioners, provide strong, recurring income streams. With the expected rise in the demand for medical services and an aging population, the long-term outlook for the sector and the REIT remains positive.

Northwest’s portfolio benefits from long-term leases with inflation-indexed rents, helping the REIT maintain stable same-property net operating income (SPNOI), even during periods of economic uncertainty. The trust currently pays a monthly dividend of $0.03 per share or $0.36 annually. This translates into a high yield of over 7%.

Northwest is strengthening its financial position through strategic asset reviews and selective divestments. Moreover, its high occupancy rate of above 96% and average lease term of 13.6 years add stability and visibility to its income.

In summary, NorthWest’s high occupancy rate, long lease expiry terms, focus on optimizing its asset mix, and reduction of debt augur well for long-term growth and will support its monthly payouts.

Pizza Pizza Royalty

Pizza Pizza Royalty (TSX: PZA) continues to be an attractive investment for investors looking to generate tax-free income, thanks to its consistent monthly dividends and high yield. The company owns and franchises a network of quick-service restaurants across Canada, distributing all of its available cash to shareholders after setting aside reasonable reserves. This shareholder-friendly approach results in a notably high payout ratio, a key attraction for those seeking regular income.

Currently, Pizza Pizza pays a monthly dividend of $0.077 per share, which translates to a high yield of approximately 6.2% at current market prices. The company’s ability to sustain and potentially grow these payments is backed by its strategic growth initiatives. These include expanding into new regions, increasing menu prices, improving in-store pickup services, introducing innovative meal options, and launching targeted marketing campaigns to drive customer traffic.

Additionally, operational efficiencies and efforts to increase the average transaction value are expected to support profit growth. Together, these moves position Pizza Pizza to offer steady monthly payouts.

Earn over $111 per month in tax-free income

Northwest Healthcare and Pizza Pizza are great dividend picks for your TFSA, offering steady, tax-free monthly income. Moreover, these stocks offer high yields. A $20,000 investment in each of these stocks could help you earn over $111 per month, as shown in the table below.