Investing through the Tax-Free Savings Account (TFSA) in high-yield dividend stocks offering monthly payouts can help you generate solid passive income without the burden of paying taxes. Moreover, one should focus on stocks with fundamentally strong businesses and resilient payouts to generate worry-free income for decades.
With this background, let’s explore two Canadian stocks that offer high and sustainable yields and can help you earn over $120 in tax-free income per month.
TFSA stock #1
Firm Capital Mortgage Investment Corporation (TSX:FC) could be a strong investment for your TFSA if you’re looking for reliable, tax-free monthly income. With a steady track record of payouts and an attractive yield, it is a compelling option for income-focused investors.
The company operates as a non-bank lender, specializing in short-term bridge loans and conventional real estate financing in both residential and commercial markets. Since 2013, Firm Capital has consistently paid dividends and even rewarded shareholders with occasional special payouts. Currently, it offers a monthly dividend of $0.078 per share, resulting in a high yield of approximately 7.6%.
Its strong distributions are backed by steady earnings from lending fees and interest income. By focusing on smaller loans, typically under $2.5 million, the firm limits its exposure to significant credit risks, helping protect the business from large potential losses. This approach, combined with a diversified portfolio, helps maintain stable returns over time.
Looking ahead, Firm Capital’s focus on the lending markets that big banks often ignore should continue to drive growth. Moreover, with its disciplined underwriting practices and balanced portfolio, the company is well-positioned to keep generating solid earnings and sustaining its reliable dividend payouts.
TFSA stock #2
Canadians could consider adding SmartCentres REIT (TSX:SRU.UN) to their TFSA portfolios to generate a solid monthly income. This real estate investment trust (REIT) pays $0.154 per share as a monthly dividend and currently offers an attractive yield of about 6.9%. Thanks to its diversified portfolio of resilient real estate properties, high occupancy, and strong tenant base, the REIT generates steady net operating income (NOI), which supports its durable payouts.
SmartCentres REIT owns 197 properties, which are located at prime intersections and draw heavy traffic, which in turn, supports the demand for its real estate. It sports a high occupancy of 98.6% and is witnessing robust leasing demand. The company’s tenant base includes major national retailers and has a higher rent collection rate. Additionally, its ability to retain customers and high demand support rent growth, driving higher NOI and steady monthly payouts.
Beyond retail, the REIT is expanding into mixed-use developments, adding recurring income streams. In addition, its significant land holding offers long-term growth potential and will drive its monthly payouts.
Earn over $120 per month
Firm Capital and SmartCentres REIT are reliable dividend stocks for TFSA investors to earn worry-free passive income. Their sustainable payouts and high yields make them compelling investments.
An investment of about $20,000, split evenly between SmartCentres and Firm Capital, could generate $120.46 per month in passive income.
| Company | Recent Price | Number of Shares | Dividend | Total Payouts | Frequency |
| Firm Capital | $12.37 | 808 | $0.078 | $63.02 | Monthly |
| SmartCentres | $26.74 | 373 | $0.154 | $57.44 | Monthly |
