Passive income has become increasingly important in today’s uncertain economic environment, shaped by ongoing geopolitical tensions, persistent inflation, and workforce restructuring driven by rapid AI adoption. Building reliable passive income streams not only enhances financial stability but also helps investors achieve their long-term financial goals more efficiently. Reinvesting these regular payouts can further accelerate wealth creation through compounding.
One of the most convenient and cost-effective ways to generate passive income is to invest in high-yield, monthly-dividend-paying stocks. These investments provide consistent cash flow while reducing reliance on market timing. Moreover, holding such investments in a Tax-Free Savings Account (TFSA) allows investors to earn and reinvest dividend income tax-free, thereby maximizing overall returns.
Against this backdrop, here are two top monthly-paying stocks that stand out as compelling additions to a TFSA portfolio right now.
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SmartCentres Real Estate Investment Trust
Real estate investment trusts (REITs) are required to distribute at least 90% of their taxable income to unitholders, making them particularly attractive for income-focused investors. Against this backdrop, SmartCentres Real Estate Investment Trust (TSX: SRU.UN) stands out as a compelling option. The REIT owns and operates 198 strategically located properties across Canada and benefits from a high-quality tenant base, with approximately 95% of tenants having regional or national footprints. Notably, about 60% of its tenants provide essential services, helping maintain stable occupancy levels regardless of broader economic conditions.
In addition to its resilient occupancy, ongoing lease renewals and new leasing activity – combined with solid rent growth – should continue to support its financial performance. This strength enables the REIT to maintain attractive distributions, currently offering a monthly payout of $0.1547 per unit, which translates to a forward yield of about 6.8%.
Looking ahead, despite macroeconomic pressures and elevated costs, demand for retail real estate remains firm, partly due to constrained new supply amid high construction expenses. This environment positions SmartCentres well to benefit, especially given its robust development pipeline of approximately 87 million square feet, including about 0.8 million square feet currently under construction.
Given its stable occupancy, strong tenant mix, and long-term growth initiatives, SmartCentres appears well-positioned to continue delivering reliable monthly income, making it an attractive choice for investors seeking consistent passive income.
Pizza Pizza Royalty
Another attractive monthly-paying Canadian dividend stock offering a yield above 6% is Pizza Pizza Royalty (TSX: PZA). The company operates 694 Pizza Pizza restaurants and 100 Pizza 73 locations through its franchise network and generates revenue by collecting royalties based on franchisee sales. This asset-light model insulates its financials from direct exposure to rising input costs, such as food prices and labour wages.
Additionally, the company aims to provide stable, predictable returns by maintaining consistent monthly distributions despite the restaurant industry’s seasonal nature. Its current monthly payout of $0.0775 per share yields 6.03% on a forward basis.
Looking ahead, PZA continues to expand its footprint and expects to grow its traditional restaurant count by 2–3% this year. At the same time, ongoing initiatives – including menu innovation, enhancements to its digital ordering experience, and a continued focus on restaurant renovations – are likely to support same-store sales growth.
Given these strategic initiatives and the stability of its royalty-based revenue model, PZA appears well-positioned to sustain its dividend payouts in the coming years, making it an excellent choice for income-focused investors.
