Canadians are feeling the pressure. Rising costs, inflation worries, and market volatility have many of us looking for ways to generate consistent, tax-free income. A Tax-Free Savings Account (TFSA) is one of the best tools we have. But once it’s set up, the big question becomes this: what dividend stock can actually help you hit your income goals without taking on too much risk?
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Consider Slate Grocery
One real estate investment trust (REIT) that deserves attention is Slate Grocery REIT (TSX: SGR.UN). It offers high monthly income, a defensive portfolio, and strong leasing activity. The focus is entirely on grocery-anchored properties in the United States, exactly the kind of essential service that continues to operate, no matter the economy.
Right now, Slate Grocery REIT offers a dividend yield of about 8.2%. The dividend stock recently traded for around $14.31. That dividend is paid monthly, making it an appealing choice for anyone who wants reliable income spread throughout the year. To hit $2,000 in annual income, you’d need to calculate how much to invest at that yield. So, let’s take a look
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| SGR.UN | $14.43 | 1,668 | $1.198 | $1,998.26 | Monthly | $24,064.24 |
Is it worth it?
That’s the basic math. But what about the business itself? In the most recent quarter, Slate Grocery REIT reported rental revenue of US$53.07 million, up from US$51.92 million a year ago. Net income rose 18% to US$16.08 million. Occupancy held strong at 94.4%, and same-property net operating income rose 4.3%. These are healthy numbers, and they speak to the REIT’s ability to grow without relying on new construction or acquisitions. Leasing spreads are also encouraging. New leases were signed at rates 22.2% above expiring leases, and renewals came in 17.1% higher. In other words, existing tenants are paying more to stay, and new tenants are signing on at higher rates, too.
Grocery-anchored retail has proven to be a reliable segment of real estate. These centres are built around tenants like Kroger and Publix, businesses that serve everyday needs. Even during downturns, people still buy food. That’s what makes this REIT a steady source of income.
Slate has also been working to manage its debt. It reported debt maturities of around US$179 million due in 2025 and has been active in refinancing and managing exposure to interest rates. While its debt-to-equity ratio sits around 133%, which is higher than average, that’s not unusual for a real estate trust. The key is how that debt is handled. So far, Slate has shown a disciplined approach, with a focus on sustainable payouts and steady growth.
Considerations
Of course, there are risks. High yields can sometimes be a red flag, especially if they’re not supported by earnings. Some of Slate’s distribution comes from the return of capital, which doesn’t come from profits. Investors should watch payout ratios over time to make sure the dividend remains supported by actual cash flow.
Still, for those focused on income, this REIT offers a unique mix of stability and yield. A $24,000 investment today could lock in that $2,000 per year, with monthly cash flowing into your TFSA, no tax owed. That kind of income can be a game changer, whether you use it to cover expenses or reinvest for more growth.
Bottom line
In a time when many Canadians are uncertain about how to make financial progress, Slate Grocery REIT provides a rare kind of clarity. It’s not flashy. But it’s consistent. And for investors who want tax-free monthly income from a reliable business, it may be one of the smartest buys on the TSX right now.
