The Tax-Free Savings Account (TFSA) is one of the best investment vehicles available to Canadian investors. One of the main reasons for that is that all of the growth, dividends, and withdrawals from the account are completely tax-free. This makes it an ideal candidate to utilize to earn $500 a month, given the right investments.
There’s no shortage of great companies on the market to help investors earn $500 a month, or even more. REITs are great options to use to build that income stream from inside the TFSA.
Here’s a look at three stellar options to fund that passive income machine.
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Slate Grocery REIT: A high‑yield grocery anchor play
Some of the best investments are those which provide necessities that we interact with daily. Grocers are superb examples of this, and Slate Grocery REIT (TSX: SGR.UN) is the perfect example.
Slate operates a portfolio of U.S. grocery-anchored properties. The properties are located near major metro markets where there’s ample foot traffic to fuel demand. These tenants tend to be resilient in all market conditions, as grocery stores remain essential regardless of economic cycles.
Furthermore, the properties include both grocery anchor tenants as well as smaller secondary tenants. The secondary businesses can be restaurants, doctor’s offices, banks, and other necessity-based businesses that contribute to both traffic and cash flow.
As of the time of writing, Slate offers a yield of 7.7% that is paid on a monthly cadence. For TFSA investors, the combination of essential retail exposure and a high payout makes Slate a compelling anchor to any tax-free income portfolio.
RioCan REIT: Monthly income without being a landlord
Owning an income-generating rental property is what most people think about when asked to earn $500 a month in passive income. Fortunately, there is a way to achieve that without a mortgage, property taxes or chasing down tenants every month.
Enter RioCan Real Estate (TSX: REI.UN).
RioCan is one of the largest REITs in Canada. The REIT has traditionally turned to its commercial retail sites as its core, but in recent years, that mix has started to shift. RioCan now has a growing portfolio of mixed-use residential properties.
The mixed-use properties typically comprise residential towers sitting atop several floors of retail. The properties are located in major metro markets along transit corridors. This makes them in demand for those seeking a shorter commute.
RioCan also boasts a large development pipeline in the billions. This includes both net-new sites as well as transitioning existing sites to mixed-use residential.
For investors looking to earn $500 a month, RioCan provides a monthly distribution from those properties, much like a landlord collecting rent. As of the time of writing, RioCan offers a 5.89% yield, making it one of the better-paying yields on the market.
For TFSA investors, RioCan’s scale and financial strength make it a reliable contributor to a monthly TFSA income stream.
Granite REIT: Industrial cash flow for stability
A third option for income-seeking investors looking to earn $500 a month is Granite REIT (TSX: GRT.UN). Unlike Slate and RioCan, Granite doesn’t cater to retail or residential tenants. Instead, Granite offers a portfolio of industrial and logistics properties.
That includes warehouses and distribution centres. Those properties are significantly larger in size and typically bound by longer-term leases. They are also driven by strong demand, fueled by e-commerce and supply chain expansion trends.
Granite is known for its conservative balance sheet, disciplined management, and high-quality tenant base. In a TFSA portfolio set up to earn $500 a month or more, Granite is the stable anchor of the three stocks mentioned here.
Turning to distributions, Granite offers a yield of 4.1%, making it a solid contributor to any well-diversified portfolio.
How to earn $500 a month in your TFSA
The three stocks mentioned above can provide investors with a diversified portfolio with grocery, retail, residential and industrial real estate exposure. Here’s how they can earn $500 a month or more in any TFSA portfolio.
| Company | Recent Price | Total Investment | No. of Shares | Dividend | Total Payout | Frequency |
| Slate Grocery REIT | $15.42 | $40,000 | 2594 | $1.20 | $3,112.80 | Monthly |
| RioCan Real Estate | $19.67 | $35,000 | 1779 | $1.16 | $2,063.64 | Monthly |
| Granite REIT | $84.97 | $25,000 | 294 | $3.45 | $1,014.30 | Monthly |
| Annual: | $6,190.74 | Monthly: | $515.90 |
