Income-focused investors prioritize dividend-payers over growth-oriented stocks when structuring a Tax-Free Savings Account (TFSA). The goal is to ensure consistent payouts and receive supplementary tax-free passive income in addition to regular or active income.
A $14,000 investment, or twice the $7,000 TFSA annual contribution in 2025, can generate consistent income. In this setup, your holdings can include an exchange-traded fund (ETF) and a real estate investment trust (REIT) that both pay monthly dividends.
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Instant diversification
Instant diversification is what you get from the iShares S&P/TSX Composite High Dividend Index ETF (TSX: XEI). This ETF replicates the performance of the S&P/TSX Composite High Dividend Index. Moreover, by design, it aims to be a long-term foundational holding, even in a TFSA.
XEI carries a medium risk rating, with exposure in high-yield Canadian domestic stocks across various sectors. The top holdings of this investment fund are industry heavyweights such as the Royal Bank of Canada, Enbridge, and Nutrien.
The ETF manages $2.4 billion in assets and is nearly at par with the broad market, performance-wise. XEI is up 17%-plus year-to-date compared to 18.4%-plus for the TSX. At $30.50 per share, the dividend offer is 4.4%. As mentioned, the distribution frequency is monthly.
Besides simplifying the selection process, XEI protects investors from overexposure or concentration in any one primary sector. The steady performance thus far in 2025 indicates investors’ trust and confidence in the fund. BlackRock Asset Management Canada Limited is the fund manager of all iShares ETFs, including the iShares S&P/TSX Composite High Dividend Index ETF.
Specialized healthcare real estate
The real estate sector (+11% year-to-date) has remained steady this year but NorthWest Healthcare Properties (TSX:NWH.UN) continues to outperform the broader market. NWH.UN is the only REIT in the cure sector. At $5.15 per share, current investors enjoy a 21.6%-plus return on top of the lucrative 7% dividend yield.
This $1.3 billion institutional landlord is the steward of properties that serve a greater purpose. NorthWest Healthcare is the specialized owner, manager, and developer of global healthcare real estate. In addition to leading healthcare operators, there are tenants in the research, education, and life sciences sectors.
NorthWest Healthcare invests in major markets and desirable urban centres. The REIT operates in seven countries, where it expects demand for essential healthcare services to continue increasing. Demand drivers include aging populations and increased urban migration.
The long-term, inflation-indexed leases generate stable and growing cash flows. Due to nearly full occupancy (96.6%), cash collections remain strong amid economic uncertainty. As of June 30, 2025, the weighted average lease expiry (WALE) of the 168 properties is 13.6 years.
Equal allocation
Assume you invest $7,000 each in XEI and NWH.UN. The table below shows the total payout if you structure $14,000 for consistent TFSA payouts. You’ll receive $66.59 in tax-free monthly income.
| Holding | Share Price | No. of Shares | Dividend/Share* | Total Payout* | Frequency |
| XEI ETF | $30.50 | 229.5 | $1.25 | $309.82 | Monthly |
| NWH.UN | $5.15 | 1359 | $0.36 | $489.24 | Monthly |
*The dividend/share and total payout are annual; Divide the payout by 12 to get the monthly amount.
Investors can choose from different variations or combinations when structuring their TFSAs. The decision depends on one’s risk tolerance and financial objectives.
