The Tax-Free Savings Account (TFSA) is a wonderful place to invest in Canadian stocks and earn income. Inside the account, you don’t pay tax on any capital gains, dividend income, or interest income. Every penny you earn stays with you.
Unlike the Registered Retirement Savings Account (RRSP), you are not taxed on any withdrawals from the TFSA either. You do temporarily lose the contribution space from the withdrawal, but you get that back in the following year. The TFSA is the most flexible tax-free account for earning income and withdrawing income.
In 2026, the TFSA contribution limit increased by $7,000. Canadians who were 18 years or older in 2009 could invest a combined total of $109,000 in their TFSA. So, what kind of income could someone earn if they invested all their $109,000 contribution today?
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A high-yielding ETF for your TFSA
One option for a TFSA would be to invest that $109,000 into an indexed exchange traded fund (ETF). They are affordable (low commissions and management fees), easy to buy, and require no individual stock management.
The Fidelity Canadian High Dividend ETF (TSX:FCCD) has exposure to some of Canada’s largest and highest-paying dividend stocks. It yields 4.3% today. Hypothetically, if you put your $109,000 of your TFSA cash into this stock, you would earn around $4,643.40 per annum or $386 averaged monthly.
Certainly, there is nothing wrong with this ETF. It has delivered 10% annualized returns since inception. For many investors, this would be perfectly acceptable, and that is completely fine.
Build your own TFSA income portfolio
However, you don’t get to cater your portfolio to sectors or stocks that you really think could outperform. Likewise, by stock picking, you might be able to enhance your yield.
Here at the Fool, we always recommend that you widely diversify and own a mix of stocks in various sectors. However, below we will demonstrate the level of income you can earn tax-free inside a TFSA.
For example, Dream Industrial Real Estate Investment Trust (TSX:DIR.UN) is an intriguing high-yielding stock. It pays a $0.0583 per unit monthly distribution. That equates to a 5.3% yield today.
Dream has a $7 billion industrial property portfolio that it owns directly and a $9 billion portfolio that it manages for institutions. It has 95.5% occupancy and a diverse mix of quality tenants. The REIT grew cash flows per unit by 5% in 2025.
A $109,000 investment in Dream Industrial with its 5.3% yield would earn $475.96 monthly or $5,711 annualized.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Dream Industrial REIT | $13.35 | 8,164 | $0.0583 | $475.96 | Monthly |
Mullen Group (TSX:MTL) is another interesting TFSA stock. It pays a $0.07 per share monthly dividend. That equates to a 5% dividend yield.
Mullen provides transportation and logistics services across Canada and the United States. The freight environment across North America has been very weak. Yet, compared to peers, Mullen’s stock has been resilient. That is likely due to a smart mix of companies, a modest valuation, and a steady stream of free cash flow.
A $109,000 investment in Mullen with a 5% yield would earn $450 monthly or $5,401 annualized.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Mullen Group | $16.95 | 6,430 | $0.07 | $450.10 | Monthly |
The Foolish takeaway
If you like investing in individual stocks, you can build a diversified portfolio with stocks like Dream Industrial and Mullen Group. It is possible to earn $400 to $500 per month, depending on how you structure your portfolio and what risks you are willing to take. If you don’t like individual stocks, ETFs are a great solution to still earn attractive tax-free TFSA income.
