TFSA Alert: This Monthly Payer Could Turn $7,000 Into $15,800 Over 10 Years

Do you want to double your money in 10 years? Use your TFSA to turn boring passive-income investments into substantial compounded gains!

The TFSA (Tax-Free Savings Account) is a great place to earn passive income tax-free. When you invest in your TFSA, all stock income stays with you. It is safe from the Canada Revenue Agency. Even when you withdraw cash from your TFSA, there is no reporting or tax requirement.

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins

Source: Getty Images

Use your TFSA to compound wealth faster

Investing in the TFSA is a simple and easy way to compound your capital faster. Canadians are lucky for the many dividend stocks that can earn them passive income. Real estate, royalties, and industrials are great places to look for monthly dividend income opportunities for a TFSA.

First Capital REIT: A quality real estate stock with a 4.9% yield

First Capital Real Estate Investment Trust (TSX: FCR.UN) is an attractive stock for compounding passive income. In fact, if you invested your $7,000 TFSA contribution in First Capital today, it could become $15,800 in 10 years or less. Here are some reasons why First Capital REIT is an interesting buy for monthly passive income in your TFSA.

With $9.2 billion in assets, 21.9 million square feet of leasable area, and 136 shopping centres, First Cap is the largest urban-focused retail landlord in Canada. The company focuses on retail that is strategically located in the heart of Canada’s largest cities. Consequently, it can attract the best quality tenants, maintain high occupancy, and demand persistent rental rate growth.

A recession-resilient stock for a TFSA

Its properties are grocery anchored and complemented with essential-service type tenants (like medical professionals, discount stores, pharmacies, banks, and restaurant chains). As a result, this REIT is very recession-resilient. People need its tenants’ services, and its tenants want to be in the best locations (which First Cap owns).

The REIT sits with 97% occupancy. It has grown base rents by a 3% compounded annual rate for nearly 20 years. Likewise, net operating income has averaged about 3% in that same time frame.

Recently, First Capital has been selling off non-core assets and reducing debt leverage. Today, it sits with 68% of its assets unencumbered. This provides it considerable balance sheet flexibility should it need it in another market downturn.

A cheap stock that could double your money over time

First Cap stock is cheap and trades at a significant discount to its private market value. The REIT has significant development assets that are not even factored into the stock price.

If investors want a low-risk income stream in their TFSA, First Cap can provide that. The REIT yields 4.9% right now. If you put $7,000 into this stock, you would earn around $28.55 per month in distribution income. That equates to $342 of passive income per year.

If you reinvested that income into buying First Cap stock for 10 years, you would end up with around $3,420 worth of stock. At the same time, if the stock can deliver a modest 5% average return (2% from valuation re-rating and 3% from income growth), you would end up with a total investment worth $15,800 or more. If you stopped reinvesting, you would earn a substantial income stream on that $15,800.

It all adds up to a nice doubling of your money in 10 years. Since you pay no tax in your TFSA, all your earnings and gains stay with you.

The Foolish bottom line

The whole point is to demonstrate that even a boring, low-risk, low-growth income stock can still provide an attractive reward. The combination of modest growth, dividend reinvestment, and tax-free compounding inside a TFSA can be a potent reward for patient investors.

Fool contributor Robin Brown has no position in any of the stocks mentioned. The Motley Fool recommends First Capital Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Dividend Stocks

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

Is BCE Still a Buy? Here’s My Verdict

Down 60% from its peak, BCE stock now offers a 6.1% yield. Is this Canadian telecom giant a dividend trap…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

2 TFSA Habits That Work While Saving But Backfire in Retirement

These two common TFSA habits may become less effective once you enter retirement.

Read more »

man looks worried about something on his phone
Dividend Stocks

Is Telus Still a Buy Right Now? Here’s My Verdict

Telus stock has been hit hard in 2026, but its push to reduce debt and improve cash flow could give…

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Forget GICs — This 6.93% Dividend Stock Pays You Monthly

SmartCentres is a monthly dividend stock yielding 6.93% and paying investors monthly. Here’s why this Canadian REIT could appeal.

Read more »

man touches brain to show a good idea
Dividend Stocks

You’ve Already Missed a Year of Dividends: Here’s Why I Wouldn’t Miss Another

You may have missed a year of dividends from one of Canada’s largest banks, but its growing income stream can…

Read more »

data analyze research
Dividend Stocks

Before You Buy a Dividend Stock for Retirement, Check This Number

A tempting dividend yield means little if the company doesn't generate enough earnings or cash flow to support it.

Read more »

happy woman throws cash
Dividend Stocks

The Dividend Stock for People Who Are Tired of Worrying About Money

This Canadian dividend stock offers a 4.3% yield supported by regulated utility operations and a multibillion-dollar growth plan through 2030.

Read more »

A family watches tv using Roku at home.
Dividend Stocks

Why I Keep Passing on Telus and BCE for This Dividend Stock Instead

Rogers may not offer the highest telecom dividend yield, but its improving cash flow, lower capital spending, and valuable sports…

Read more »