The Tax-Free Savings Account (TFSA) contribution limit for 2026 is set at $7,000. If you haven’t made any contributions to the TFSA in 2025, your contribution room will grow to $14,000 on January 1, 2026. You can use this contribution room to generate a consistent income source and even compound it if you don’t need the money immediately. If you want a monthly payout, it is not necessary to invest in monthly dividend stocks. In fact, those with monthly payouts don’t grow their income significantly, and you are left with a depreciating income source. A good strategy is to have a mix of both.
High-yield stocks for your TFSA
It is a good time to buy SmartCentres REIT (TSX:SRU.UN) and Telus Corporation (TSX:T) as their share trades at a lower price, inflating their dividend yields.
SmartCentres REIT is a stock that gives a monthly payout. It doesn’t grow its dividends, but is among the few monthly payors with a high yield of 7.1%. You can be assured of the payout as its high exposure to Walmart as its tenant gives the REIT stable cash flows.
Telus is another high-yield stock that gives a quarterly payout and has paused dividend growth until the share price reflects the growth. The share price trades at a 12-year low, which has inflated the yield to 9.4%. Investors are not ruling out the possibility of a dividend cut as the debt levels are too high, making deleveraging a priority.
However, Telus has stable and growing free cash flow (FCF), and the cash dividend is 75% of FCF, which gives it flexibility to sustain current dividends. Several investors have opted for a dividend reinvestment plan (DRIP), where the dividend is paid in the form of more income-generating shares. If these investors convert to cash payouts, the payout ratio will surpass 100% of FCF and may force Telus to cut dividends.
If we look beyond that risk, Telus is accelerating debt repayment to reduce interest costs and increase FCF by 10% annually, and bring down the dividend payout below 100%. It may resume dividend growth at 3–5% once the net debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) falls to the 2.2 – 2.7 times range from 3.5 times at present.
High dividend growth stocks
Manulife Financial and Canadian Natural Resources are buys for their 12-year average dividend growth rate of 10% and 20%, respectively. They are trading near their highs, which has reduced their dividend yield to 3.5% and 5%, respectively. However, their business expansion has increased cash flow and dividends. Manulife offers DRIP while Canadian Natural Resources doesn’t.
How to structure a $14,000 TFSA investment for a consistent monthly payout
You can use the $14,000 TFSA contribution room of 2025 and 2026 to buy 100 shares each of the above four stocks.
100 shares of high-yield Telus and SmartCentres REIT will cost you $4,360 and can give you a higher payout of $352 in 2026. 100 shares of higher dividend growth stocks Manulife and Canadian Natural Resources will cost you $9,573 and provide only a $411 quarterly payout. However, they can grow your income more than inflation, thereby increasing your purchasing power. I took a conservative dividend growth estimate of 8%.
If you do nothing, these stocks will give you $763.40 in 2026, assuming no dividend growth in 2026. However, the actual amount will be higher. By 2035, this amount could grow to $1,297. Since three of these stocks have quarterly payouts, monthly consistency may not be there.
| Stock | Share Price | Dividend per Share in 2025 | Dividend Income in 2026 | Cost of 100 Shares of Each Stock | 10-year Estimated Dividend CAGR | Estimated Dividend in 2035 | Estimated Dividend Income in 2035 |
| SmartCentres REIT | $25.80 | $1.85 | $185.00 | $2,580.00 | 0% | $1.85 | $185.00 |
| Canadian Natural Resources | $45.50 | $2.35 | $235.00 | $4,550.00 | 8% | $5.07 | $507.00 |
| Manulife Financial | $50.23 | $1.76 | $176.00 | $5,023.00 | 8% | $3.80 | $380.00 |
| Telus | $17.80 | $1.67 | $167.40 | $1,780.00 | 3% | $2.25 | $225.00 |
| Total | $763.40 | $13,933.00 | $1,297.00 |
To compound the returns, you can invest in Telus and Manulife’s DRIP. Further, you can use the CNQ dividend to buy more SmartCentres REIT to compound that money to an even higher monthly payout.
