First off, turning a Tax-Free Savings Account (TFSA) into a $500-per-month dividend machine is absolutely possible. Yet it doesn’t happen overnight. It’s built through a mix of smart stock selection, consistent contributions, and the magic of compounding over time. The idea is to focus on reliable, dividend-paying Canadian companies and real estate investment trusts (REIT) – those that offer both steady income and growth. So let’s get into how to get started, and one sure-fire dividend stock to get you started.
Starting out
Start by setting a clear target. To earn $500 a month, or $6,000 a year, at an average dividend yield of about 5%, you’d need around $120,000 invested. That number might sound big, but it’s completely realistic with a disciplined plan. If you’re starting smaller, you can build toward that goal by reinvesting dividends and adding the annual TFSA contribution limit. Over time, each contribution increases your capital, and the compounding effect of reinvested dividends accelerates growth far faster than you might expect.
The backbone of your TFSA should be blue-chip dividend growers. These are dividend stocks that have raised payouts for years, built on stable cash flow. The Canadian banks are perfect for this. Banks might not be flashy, but they form the foundation of most long-term income portfolios because they pay consistently and raise dividends over time.
Next, layer in defensive utilities and pipelines. These dividend stocks rarely cut dividends and often increase them every year, even during recessions. Plus, these also add sector diversification, helping your TFSA hold up during market corrections. From there, include a few REITs and income-oriented stocks. These monthly payers fill in the gaps between quarterly dividends, helping you achieve that consistent paycheque feel. If you want to accelerate the process, consider sprinkling in a dividend ETF. They offer broad diversification across sectors, automatic rebalancing, and a healthy yield. Perfect if you prefer simplicity or want to reinvest dividends without managing multiple individual stocks.
GRT.UN
Granite REIT (TSX:GRT.UN) is one of those rare Canadian stocks that combines stability, income, and growth in a way that makes it ideal for building long-term monthly dividend income. Granite REIT focuses on industrial and logistics real estate, a segment that’s become one of the most resilient and profitable areas of commercial property. It holds 114 tenants across Canada, the United States, and Europe, with a tenant base that includes some of the most recognizable names in global manufacturing and e-commerce. Over time, Granite has expanded into warehouses and distribution centres that benefit directly from the rise of e-commerce and global trade.
What makes Granite especially appealing for income investors is its strong financial health. The REIT maintains a conservative payout ratio of 62%. Earnings have continued to trend in the right direction. In its most recent quarterly results, Granite reported net operating income of $123 million, up from $117 million, supported by higher rental rates, low vacancies, and new development completions. The REIT’s occupancy rate sits above 96%, reflecting strong tenant retention and demand for its logistics properties. The current yield is around 4.4%, with a long-term record of distribution growth that has outpaced inflation.
From a valuation standpoint, Granite trades at a valuable 12.5 times earnings, which is fair given its growth rate and stability. It’s not the highest-yielding REIT on the market, but its strength lies in safety and consistency, not speculation. Many higher-yield REITs have to take on riskier tenants or borrow more aggressively to support their payouts, but Granite doesn’t. Instead, it delivers moderate, dependable income that grows slowly but surely year after year.
Bottom line
Ultimately, Granite REIT is a classic example of what a long-term income stock should be: predictable, conservatively managed, and built around assets that generate durable demand. In fact, here’s how much to invest for $500 each month in dividend income.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| GRT.UN | $77.59 | 1,765 | $3.40 | $6,001 | Monthly | $136,905 |
All tallied, Granite REIT gives investors a dependable monthly payout, strong protection against inflation, and steady appreciation potential as industrial real estate continues to grow in value. For anyone building a portfolio designed to pay you every month, Granite REIT fits the bill perfectly.
