Do you want to make $50 per month tax-free in your Tax-Free Savings Account (TFSA)?
If so, Canadian real estate investment trusts (REITs) are the instruments for doing so.
REITs typically have high yields, positive dividend growth, and monthly payout schedules. The monthly payout schedule makes REITs markedly different than stocks, which typically pay their dividends out quarterly.
In this article, I’ll explore how you can earn $50 per month in your TFSA tax-free with REITs.
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My experience with earning passive dividend income
Earning passive dividend income is something that I have a bit of experience with. My projected dividend income for 2026 is about $6,000, which is a nice little income supplement. I actually earned a similar amount last year, so I know what I’m talking about. However, it takes a fair bit of invested funds to get $6,000 per year coming in. Not everybody has hundreds of thousands of dollars in the bank. So, I’ll explore how you can get $50 coming in each and every month with less than $20,000.
Why REITs are best for monthly income
Although I’ve already said it, I must stress that REITs are your best bets for monthly dividend income. The reason is that virtually all of them pay their dividends monthly, so screening out non-monthly dividend payers doesn’t screen out much in the REIT space. With REITs, you aren’t sacrificing quality by demanding monthly payouts. So, this is a good pile to go looking for monthly-pay securities in.
An example of a high-yield REIT
Having explored the merits of REITs in general, it’s time to find a specific REIT that suits our purposes. Residential REITs are ideal because they are somewhat more stable and dependable than retail REITs.
Consider Killam Apartment REIT (TSX:KMP.UN). It’s a Canadian residential REIT that invests mainly in apartment buildings. Apartment buildings are some of the most relevant, evergreen buildings out there. Whereas many retail REITs have had to write down entire malls and strip malls due to competition from e-commerce, or their type of building falling out of favour, residential real estate will always be with us, and apartments will always be apartments. Residential REITs may need to renovate their properties from time to time, but they’ll never have to write them off completely.
Killam Apartment REIT pays a $0.06 quarterly dividend. This dividend annualizes to $0.72, producing a 4.4% dividend yield at today’s price. Therefore, you can get $50 per month worth of dividends from it if you invest $13,566 in the stock. Here’s the math on that:
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Killam Apartment | $16.28 | 833 | $0.06 per month ($0.72 per year). | $50 per month ($600 per year) | Monthly |
As you can see, it’s quite easy to get $50 worth of monthly income from REITs like Killam. All it takes is a little over $10,000 and some patience.
Foolish takeaway
If you want to get $50 per month in your TFSA, the most important thing for you to do now is save money. Work, put a little into your TFSA each month, and invest that little bit into REITs. Over time, you’ll get the income you seek.
