Retirement Planning: How to Generate $2,000 in Monthly Income

This TSX income fund pays a fixed $0.10-per-share monthly distribution, which can make retirement planning easier.

Key Points
  • Generating $2,000 per month from EIT.UN requires roughly $337,400 invested at current prices based on a $0.10 per share monthly payout.
  • Inside a TFSA, the full distribution is tax-free; in a taxable account, the year-end distribution mix affects after-tax income treatment.
  • EIT.UN is designed for income first, using active management and moderate leverage, but it remains exposed to equity market risk.

When you shift from building wealth to living off it, the conversation changes. It’s no longer just about growth at all costs.

The focus turns to reliable cash flow, enough to supplement Canada Pension Plan (CPP), Old Age Security (OAS), and any Registered Retirement Income Fund (RRIF) withdrawals — without constantly worrying about selling shares at the wrong time.

For investors who want a predictable monthly income, one long-standing option in the Canadian market is Canoe EIT Income Fund (TSX: EIT.UN). It’s not new, not flashy, and not built on exotic derivatives.

But it has been around for years doing one thing consistently: paying a monthly distribution of $0.10 per share like clockwork. Here’s how you could use it to target $2,000 per month in income.

A glass jar resting on its side with Canadian banknotes and change inside.

Source: Getty Images

What is EIT.UN?

EIT.UN is a closed-end income fund focused on generating consistent cash flow. It holds an actively managed portfolio of dividend-paying equities, roughly split between Canadian and U.S. stocks. The mandate is income first, capital appreciation second.

Unlike a traditional exchange-traded fund (ETF) that simply tracks an index, EIT.UN is actively managed. The portfolio manager can shift allocations, trim positions, and raise cash when necessary. The fund is also permitted to use leverage of up to 1.2 times assets. In simple terms, for every $100 invested, up to $20 can be borrowed and invested to enhance income.

Leverage increases yield potential — but it also increases downside risk in volatile markets. This is not a guaranteed income product. It’s still equity-based and will move with markets. The management fee is 1.1%, excluding borrowing costs.

The passive-income math

EIT.UN currently trades at $16.87 per unit. The fund pays a $0.10 monthly distribution per unit, or $1.20 annually.

To generate $2,000 per month, you would need: $2,000 ÷ $0.10 = 20,000 units.

At $16.87 per unit: 20,000 × $16.87 = $337,400 invested.

That investment would produce $24,000 annually, paid in 12 monthly installments of $2,000.

Inside a Tax-Free Savings Account (TFSA), that full $2,000 per month is tax-free. You can reinvest it, withdraw it, or spend it without triggering any tax reporting.

What about taxes outside a TFSA?

If you hold EIT.UN in a non-registered account, the tax picture becomes more complex.

Income funds don’t simply pay “dividends.” Their distributions can be a mix of eligible and non-dividends, foreign income, capital gains, and return of capital.

Capital gains are generally taxed at 50% of your marginal tax rate, which is typically more favourable than fully taxable interest income. Eligible dividends receive the dividend tax credit. Return of capital, when present, isn’t immediately taxable but reduces your adjusted cost base, increasing capital gains when you eventually sell.

For 2025, EIT.UN’s distribution breakdown was 95.01% capital gains and 3.99% eligible dividends. This can change year to year, so be sure to check in December when tax information becomes available.

This mix can be tax-efficient — but it adds complexity. You’ll receive a T3 slip, and the after-tax yield will depend on your personal marginal tax bracket. In a TFSA, none of this matters. In a taxable account, it absolutely does.

Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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