Does it make sense to invest your entire 2025 Tax-Free Savings Account (TFSA) contribution room of $7,000 in one stock? While diversification helps reduce risk, it also reduces returns. If you are confident about the returns a stock can give, investing the entire contribution room in one stock can enhance your returns.
Investing in too many stocks without knowing what to expect is better than investing all your money in three to five stocks, of which you know every single detail.
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You can invest the whole 2025 TFSA contribution in this monthly income payer
One such stock of which you can be confident is CT REIT (TSX: CRT.UN). Its business model is simple. CT REIT has the backing of its parent, Canadian Tire’s retail store footprint. Whenever Canadian Tire wants to open a new store or expand or intensify an existing store, it calls CT REIT. The REIT doesn’t aggressively look for tenants; it gets the first right to properties that have an assured tenant – Canadian Tire.
If that is the case, why doesn’t Canadian Tire itself buy and build properties? It is because owning properties under its name exposes the retailer to the credit risk of the parent. CT REIT enjoys the tax benefit of a trust.
Canadian Tire gets to deduct rental expenses from its taxable income and reduce its tax liability. CT REIT does not pay tax on that rent if it distributes the maximum amount to unitholders. If the trust retains the earnings, it is charged the highest federal tax rate.
The biggest beneficiary in this setup is the unitholder. And CT REIT’s biggest unitholder is Canadian Tire. Thus, the REIT remains generous with dividends as the parent gets a significant portion. The win-win for both parties assures you that the dividends will come as they are being funded by Canadian Tire’s tax-deductible expenses and not profits.
You can invest $7,000 in CT REIT without hesitation and expect an annual yield of 6%.
What kind of returns can you expect from a $7,000 investment?
CT REIT grows its dividends at an average annual rate of 3% every July. This growth is funded by a 1.5% increase in existing rent and rent from store enhancements and new store developments. In 2025, Canadian Tire closed a few stores as it saw slowed same-store sales. This slowed CT REIT’s dividend growth to 2.5% in July 2025.
A $7,000 investment can buy you 437 units of CT REIT at $16 per unit. These units will earn you a monthly dividend of $34.54 from January 15 onwards. The amount will increase by 2–3% in July 2026.
The $34.54 amount might look small, but if you opt for a dividend reinvestment plan (DRIP), that amount will buy you more income-generating units every month. Suppose the $34.54 dividend buys you two units of CT REIT. In February, you will get dividends on 439 units (437 + 2). Compounding this for 10 years can convert into a sizeable amount.
As they say, time spent in the market is more important than timing the market.
How to enhance your TFSA returns on this one-time investment
CT REIT DRIP is a good option. You can also consider buying risky stocks, like Hive Digital Technologies or ETFs with monthly payouts. The monthly payout of $34.54 can convert into an annual dividend of $414. A $414 investment in slightly risky stocks can accelerate your returns. How you use the money can determine the returns you receive from a one-time investment of $7,000.
