If you want to build real wealth in Canada, you don’t always need a huge starting amount. What you need instead is a smart plan and the patience to stick with it. A Tax-Free Savings Account (TFSA) can give you the perfect setup because it lets all your gains and dividends grow tax-free. Add some fundamentally strong stocks to your TFSA portfolio, and your returns don’t just arrive every month but also build up for the long term.
In this article, I’ll highlight two top monthly dividend stocks with solid yields and strong operations that could transform a $20,000 TFSA contribution into a dependable source of monthly income.
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SmartCentres REIT stock
Let’s start with SmartCentres REIT (TSX:SRU.UN) — a top real estate investment trust that has mastered the art of paying investors while consistently growing its portfolio. As one of Canada’s largest fully integrated REITs, it has a large portfolio of 197 properties spread across retail, office, residential, and industrial sectors.
Its stock currently trades at $26.68 per share with a 9% year-to-date gain, giving it a market cap of about $3.9 billion. At this market price, it offers a monthly distribution that works out to a 6.9% annualized yield.
Despite the ongoing macroeconomic uncertainties, investors are rewarding SmartCentres for its resilient retail base and expansion into residential and mixed-use development. In the second quarter, the REIT’s occupancy reached 98.6%, with nearly 148,000 square feet leased during the quarter and rent growth of 8.5% excluding anchor tenants. Stronger customer traffic and healthier tenant performance helped its net operating income (NOI) climb by 7.3% YoY (year over year) last quarter.
SmartCentres REIT is continuing to expand beyond retail. For example, it opened three new self-storage projects this year, and its Vaughan Northwest residential project is moving ahead with the majority of Phase I units already sold.
Overall, with a strong development pipeline, stable balance sheet, and an AFFO (adjusted funds from operations) payout ratio below 85%, SmartCentres could continue to deliver reliable monthly cash to investors for years to come.
Northwest Healthcare REIT stock
To balance out, NorthWest Healthcare Properties REIT (TSX:NWH.UN) could add stability to your TFSA portfolio with assets that serve as critical infrastructure. Its 168 properties include hospitals, clinics, and medical office buildings across Canada, Brazil, Europe, and Australasia.
After climbing 16% year to date, its stock currently trades at $5.17 per share with a market cap of about $1.3 billion. At this market price, it offers a 7% annualized yield, paid monthly.
Northwest posted $99 million in revenue from investment properties in the second quarter. This figure reflected a 16.9% YoY decline due to asset sales, but it still delivered stable same property NOI growth of 2.8%. As a result, the REIT’s net income swung to a positive $32.6 million from a loss of $127.2 million a year ago.
Strategically, Northwest has sold more than $282 million worth of non-core assets so far this year to reduce leverage. Nevertheless, its portfolio remains highly stable with 97% occupancy and a weighted average lease term of 13.5 years. And much of it is backed by government-supported tenants. Despite short-term noise such as temporary rent deferrals with Healthscope in Australia, the REIT continues to collect on obligations and expects deferrals to be repaid by 2026.
With debt repayment underway, disciplined capital allocation, and global exposure to healthcare properties, Northwest could give you a great mix of income reliability and long-term defensive growth.
