The 2025 Tax-Free Savings Account (TFSA) contribution room of $7,000 could become a good source of monthly passive income. If you want your money to last for a very long time, it is better to invest it in a resilient dividend stock that can help you enjoy a continuous, sizeable income over the long term.
While term deposits can give you assured returns on maturity, they can barely fight inflation. Ask those who bought groceries from the interest on a term deposit. The high food and healthcare inflation can result in insufficient passive income. However, this monthly passive-income payer is where you can invest your entire TFSA contribution without worrying about getting negative returns.
Source: Getty Images
This 6% monthly passive-income payer is worth adding to your TFSA
CT REIT (TSX:CRT.UN) has a monthly distribution policy whereby it passes on the rental income from Canadian Tire stores to its unitholders. It is among the few real estate investment trusts (REITs) that grow their distribution annually by 3% on average, even during a crisis. The REIT can sustain dividend growth as it is funded by,
- A 1.5% annual increase in rental income from Canadian Tire, and
- Higher rental income from the intensification of existing stores, development of new stores, and acquisition of new properties.
CT REIT has the first right to acquire and develop the retailer’s stores, which means it doesn’t have to compete or negotiate terms. Moreover, more than 90% of the stores are occupied by the retailer, which means the REIT doesn’t have to worry about occupancy.
Further, Canadian Tire pays development fees to CT REIT, reducing the need for working capital like other REITs that fund the development from their pockets. As the transaction is inter-group, the risk of bad debt reduces.
The many benefits of CT REIT make it a monthly passive-income payer in which you can invest your entire TFSA contribution.
How much monthly passive income can you earn from a $7,000 investment
CT REIT is currently trading between $15 and $16. A $7,000 investment can buy you 447 units. The REIT increases its dividend every year in July. This year, it increased the monthly distribution by 2.5% to $0.07903. The 447 units can pay you $35.33 in monthly passive income.
| Year | CT REIT Dividend/Share | Investment Amount | DRIP Share Count | Total Share Count | Annual Dividend Income | Monthly Dividend Income |
| 2025-26 | 0.94836 | $7,000 | 447.00 | 447.00 | $423.92 | $35.33 |
| 2026-27 | $0.977 | $16 | 26.49 | 473.49 | $462.51 | $38.54 |
| 2027-28 | $1.006 | $17 | 27.21 | 500.70 | $503.76 | $41.98 |
| 2028-29 | $1.036 | $18 | 27.99 | 528.69 | $547.88 | $45.66 |
| 2029-30 | $1.067 | $18 | 30.44 | 559.13 | $596.80 | $49.73 |
| 2030-31 | $1.099 | $18 | 33.16 | 592.28 | $651.16 | $54.26 |
| 2031-32 | $1.132 | $18 | 36.18 | 628.46 | $711.66 | $59.30 |
| 2032-33 | $1.166 | $18 | 39.54 | 667.99 | $779.12 | $64.93 |
| 2033-34 | $1.201 | $18 | 43.28 | 711.28 | $854.50 | $71.21 |
| 2034-35 | $1.237 | $18 | 47.47 | 758.75 | $938.87 | $78.24 |
| 2035-36 | $1.275 | $18 | 52.16 | 810.91 | $1,033.52 | $86.13 |
| 2036-37 | $1.313 | $18 | 57.42 | 868.33 | $1,139.90 | $94.99 |
| 2037-38 | $1.352 | $18 | 63.33 | 931.66 | $1,259.72 | $104.98 |
| 2038-39 | $1.393 | $18 | 69.98 | 1001.64 | $1,394.98 | $116.25 |
| 2039-40 | $1.434 | $18 | 77.50 | 1079.14 | $1,548.00 | $129.00 |
| 2040-41 | $1.478 | $18 | 86.00 | 1165.14 | $1,721.51 | $143.46 |
You can keep getting a monthly payout that will grow with inflation. If the REIT increases its distribution by 3% annually, the $35.33 monthly payout will increase to $44.75 in nine years and $34.67 in 16 years.
However, if you don’t want this amount, you can invest in CT REIT’s dividend-reinvestment plan (DRIP). The DRIP will give you income-generating units instead of dividends, thereby compounding your returns. Assuming the unit price increases to $16 in 2026, $17 in 2027, and then stabilizes at $18 in 2028, your dividend will earn you DRIP shares as mentioned in the table.
The $423.90 annual dividend could buy you 26.49 CT REIT units next year. From July 2026 onwards, your distribution will be calculated on 473.49 units and not 447 units.
The power of compounding
For the ease of calculation, we calculated DRIP shares on an annual basis. However, in reality, the DRIP shares will be calculated monthly, which means the DRIP share count and dividend amount may be higher than the above calculation.
The power of compounding could double your monthly passive income in nine years and quadruple it in 16 years. A one-time investment of $7,000 could earn you $1,721.51 in annual passive income over the long term.
