A Perfect February TFSA With a 7.5% Monthly Payout

A steady monthly payout is the hook, but the real question with Slate Grocery REIT is whether cash flow can keep up.

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Favorite Investment Quote

“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published February 19, 4:40 pm EST

| More on: SGR.UN

Key Points

Slate Grocery owns U.S. grocery-anchored centres, so tenant demand is usually steadier than most retail.
The distribution has stayed consistent, but Q4 AFFO coverage was stretched, so it needs leasing and costs to cooperate.
It can fit a TFSA income plan if you’ll monitor results, because the yield isn’t “set-and-forget.”

A monthly dividend stock can feel like it was built for February. The holidays have finished draining wallets, the Tax-Free Savings Account (TFSA) contribution season sits front and centre, and most people want momentum that feels real, not theoretical. A monthly payer turns “I should invest” into a rhythm, because the cash flow shows up regularly and can be reinvested quickly inside a TFSA.

Blocks conceptualizing Canada's Tax Free Savings Account — Source: Getty Images

SGR

Slate Grocery REIT (TSX:SGR.UN) owns U.S. grocery-anchored retail real estate, which is a fancy way of saying it collects rent from centres anchored by the kinds of tenants people keep visiting even when budgets tighten. It pitches itself as “critical real estate infrastructure” tied to everyday needs, and that positioning matters because it aims to reduce the drama that can come with other retail or office landlords.

Over the last year, most of the headline flow has looked like steady knitting, not splashy reinvention. It kept declaring an annual distribution of $1.18, which keeps income investors paying attention. That consistency sounds boring, and boring is often the point in a monthly-income TFSA pick.

The other big theme has been leasing and balance-sheet housekeeping. In its latest year-end update, it highlighted high leasing volume, stable occupancy of 94.4% at year-end, and a big gap between in-place rent and estimated market rent, which it frames as a runway for future rent growth. In short, it thinks it can lift rents over time without needing perfect economic conditions.

Earnings support

Now, for the numbers that actually pay the bills. In the fourth quarter (Q4) of 2025, rental revenue came in at US$54.6 million and net operating income (NOI) landed at US$42.2 million. It posted funds from operations (FFO) of US$14.9 million, or US$0.25 per unit, and adjusted FFO (AFFO) of US$11.7 million, or US$0.19 per unit. Those are the cash-flow measures real estate investment trust (REIT) investors tend to watch, as these help you judge whether the distribution has real support.

That support looks a bit tight on an AFFO basis right now. The Q4 AFFO payout ratio showed 110.8%, which means the distribution ran ahead of that quarter’s AFFO. That may not automatically mean danger tomorrow, but it does mean you should pay attention to whether leasing momentum and financing costs keep moving in the right direction.

On outlook and valuation, the story is mixed in a useful way. It said most of its debt sits at fixed rates, with a weighted average interest rate of 5% and 87.8% of debt fixed, which can help keep cash flow steadier if borrowing costs bounce around. On the market side, units have traded around the $15.70 range lately, and the forward yield sits roughly in the 7.5% range, which explains why income hunters keep circling it. Right now, here’s what even $15,000 can bring in from income alone.

COMPANY	RECENT PRICE	NUMBER OF SHARES	ANNUAL DIVIDEND	ANNUAL TOTAL PAYOUT	FREQUENCY	TOTAL INVESTMENT
SGR.UN	$15.70	955	$1.18	$1,126.90	Monthly	$14,993.50

Bottom line

So, could it be a buy for monthly income seekers? Certainly, if someone wants a TFSA-friendly, monthly-paying REIT tied to essential retail and can live with the trade-offs. The biggest “yes” is the steady distribution and the grocery-anchored focus. The biggest “maybe” is that AFFO coverage looks stretched in the latest quarter, so it suits investors who will actually monitor results instead of buying it and forgetting it exists.