How I’d Create $190 in Monthly Income With a $25,000 TFSA Investment

The Tax-Free Savings Account (TFSA) allows you to buy and hold qualified investments and benefit from tax-free returns for life. These investments include stocks, bonds, mutual funds, exchange-traded funds, and more.

TFSA holders should consider gaining exposure to quality dividend stocks and benefit from a steady stream of passive income as well as long-term capital gains. In this article, I have identified a high-dividend stock with a monthly payout that you can consider owning in September 2025.

So, let’s see how a $25,000 TFSA investment in this dividend stock could help you earn $190 in monthly income.

Is this TSX dividend stock a good buy for your TFSA?

Valued at a market cap of $630 million, Timbercreek Financial (TSX:TF) provides shorter-duration structured financing solutions to Canadian commercial real estate investors. It focuses on lending against income-producing real estate properties, such as multi-residential, retail, and office properties, primarily in urban markets.

Timbercreek Financial delivered solid second-quarter (Q2) results with distributable income of $0.18 per share. Given a quarterly dividend of $0.174 per share, the company has a payout ratio exceeding 90%, resulting in a yield of 9.2%.

The commercial real estate lender has demonstrated resilience despite ongoing macro uncertainties, with the portfolio growing 11% year over year to $1.1 billion.

Notably, Timbercreek has made progress in resolving “problem loans,” clearing nearly $83 million in Stage 2 and Stage 3 assets since the previous earnings call.

This portfolio cleanup provides capital for new investments while reducing concentration risk. Management expects continued progress on remaining staged loans through year-end, with several assets moving toward resolution through entitlement approvals and active sales processes.

Timbercreek’s strategic focus on multifamily residential real estate, comprising 55% of the portfolio, provides a defensive moat during economic uncertainty. The company maintains disciplined underwriting with a 66% weighted average loan-to-value ratio and benefits from rate floors on 87% of floating-rate loans, protecting income during rate cuts.

The pending credit facility renewal represents a key catalyst, featuring substantial upsize and improved margin terms that will support growth toward the $1.3 billion portfolio target by year-end. This enhanced capacity, combined with Canada Mortgage and Housing Corporation-approved lender status, positions Timbercreek advantageously in the bridge and construction lending market.

However, challenges tied to tariff policies have created transaction delays and borrower uncertainty. The weighted average interest rate declined to 8.6% from 9.8% year over year, as the Bank of Canada’s rate cuts took effect. However, management expects to maintain adequate spreads above funding costs.

Analysts tracking the TSX dividend stock forecast adjusted earnings to expand from $0.56 per share in 2024 to $0.72 per share in 2026. Bay Street remains bullish and forecasts Timbercreek stock to gain 7.3%, given consensus price targets. If we adjust for dividends, cumulative returns could be more than 16%.

At current trading levels, the TSX stock trades at a 16% discount to book value while offering a substantial yield premium over bonds.

The Foolish takeaway

For income-focused investors seeking exposure to Canadian commercial real estate with cycle-tested management, Timbercreek presents compelling value despite near-term headwinds from policy uncertainty and rate normalization pressures.

A $25,000 investment in Timbercreek stock would help you buy 3,276 shares of the company. Given its monthly dividend of $0.058 per share, investors will earn $190 in monthly dividends or $2,280 annually.

Canadian TFSA holders should identify other such quality dividend payers and diversify their portfolio, which lowers overall risk.