Canadians aged 18 and above can save, invest, and earn tax-free through the Tax-Free Savings Account (TFSA). The TFSA has become the preferred savings vehicle, eclipsing the popularity of the older Registered Retirement Savings Plan (RRSP).
However, all account holders must adhere to the TFSA guidelines to avoid incurring unnecessary tax penalties. You also risk an audit by the Canada Revenue Agency (CRA) if you break the rules.
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Pick stocks wisely
For rule-abiding TFSA investors, it is helpful to pick stocks wisely to ensure consistent payouts. If you’re structuring your investment portfolio for the next two years, consider including Slate Grocery (TSX: SGR.UN) and Chemtrade Logistics (TSX: CHE.UN).
Both stocks pay monthly dividends. Given the average dividend yield of 7.3%, a $14,000 investment ($7,000 per year, the TFSA annual limit, over two years) will generate $1,017.10 in tax-free income annually or $84.76 monthly. Your TFSA balance should also compound faster since you can reinvest dividends 12 times a year, instead of 4.
Favourable fundamentals
Slate Grocery is a pure play U.S. grocery-anchored real estate investment trust (REIT). This $843.2 million REIT has acquired well-positioned properties and signed up high-quality, essentials-based tenants to serve the daily needs of American customers.
Its CEO, Blair Welch, said, “Against a backdrop of favorable fundamentals and attractive supply-demand dynamics in the grocery-anchored sector, we believe our portfolio – anchored by below-market rents – is well positioned to drive stable growth and long-term value.” The portfolio and anchor occupancy rates are 94% and 97%, respectively.
According to Welch, the REIT’s strong leasing volumes and consistently high rental spreads over the last several quarters translate into healthy net operating income (NOI) growth. In the first half of 2025, net income increased 5.6% year-over-year to US$29.2 million.
Besides the favourable fundamentals in the grocery store market, Slate Grocery considers elevated construction costs and tight lending conditions as positive factors. It limits the pace of new retail development and overall retail availability. U.S. tariffs also discourage new development.
Welch added that no new supply creates a favourable environment for landlords. Expect high tenant retention as well as meaningful rent increases as leases expire. At $14.28 per share (+8.4% year-to-date), you can partake in SGR.UN’s juicy 8.4% dividend yield.
Resilient business model
Chemtrade is a leading global provider of industrial chemicals. The $1.3 billion company provides essential products to critical industries, including recession-resistant markets. If you invest today, CHE.UN trades at $11.17 per share (+6.2% year-to-date). The dividend offer is 6.2%.
Two core business segments, Sulphur & Water Chemicals (SWC) and Electrochemicals (EC), generate revenue. Due to its exposure to diversified end-markets, Chemtrade boasts a resilient product portfolio that offers both defensive and growth-oriented opportunities.
The stellar financial results to start the year augur well for the stock. In Q1 2025, revenue and net earnings increased 11.5% and 17% year-over-year to $466.3 million and $49.1 million. Notably, cash flows from operating activities soared 382.4% to $11.6 million from a year ago. Chemtrade Vision 2030, a new strategic framework, will focus on high-growth investments.
Contribute for life
There’s no income requirement to open and contribute to the TFSA. Furthermore, the plan has no expiry date, so you can contribute for life. You can use the annual contribution limits to buy more shares of high-yield stocks like Slate Grocery and Chemtrade Logistics for consistent payouts.
