A Practical Way to Use Your TFSA to Generate $300 a Month – Tax-Free

Generate $300 a month in tax‑free TFSA income using a balanced mix of stocks such as this high-yielding trio.

Key Points
  • The Tax-Free Savings Account (TFSA) offers Canadians a tax-efficient path to building passive income, making it easier to achieve financial goals like generating $300 a month.
  • Investing in Real Estate Investment Trusts (REITs) is a key strategy for TFSA investors to achieve dependable passive income due to their high yields and stable cash flows.
  • A balanced investment in RioCan, SmartCentres, and Allied Properties REITs can provide a diversified portfolio that supports a $300 monthly income with growth and defensive qualities.

The Tax-Free Savings Account (TFSA) is one of the best investment vehicles available to Canadians to build passive income. Distributions in a TFSA are tax-free, meaning that every dollar of investments can be routed to investments. For those investors looking to generate $300 a month, that goal is far easier to attain in a TFSA.

One of the main engines for TFSA investors looking to generate $300 a month is to invest in REITs. REITs are known for offering higher yields. This makes achieving that passive income goal much easier.

For investors focused on building dependable passive income, REITs offer a practical and repeatable path.

Fortunately, there’s no shortage of great picks on the market to help reach that goal. Here’s a trio of options that offer high-yields, defensive appeal, and strong growth prospects.

Real estate investment concept with person pointing on growth graph and coin stacking to get profit from property

Source: Getty Images

Start with a strong anchor for TFSA income

RioCan Real Estate (REI.UN) is one of Canada’s largest and most established REITs. RioCan offers a large portfolio of commercial retail and, in recent years, an increasing number of mixed‑use residential properties.

The REIT operates those properties across Canada with an emphasis on major urban markets that sit along transit corridors. RioCan’s scale gives it access to higher‑quality tenants and long‑term leases, and those support high occupancy and predictable cash flow.

For TFSA investors, that stability matters. RioCan’s mixed-use residential portfolio, in particular, provides a solid foundation for income-seeking investors that is similar to a landlord renting a property. The key difference is not needing a mortgage, to pay for renovations, or chase down tenants. As of the time of writing, the REIT offers a monthly distribution with a yield of 5.75%.

Now add stability and predictable cash flows

Another option for those looking to generate $300 a month in income is SmartCentres REIT (SRU.UN). SmartCentres adds another layer of reliability to any TFSA portfolio. SmartCentres’ properties are retail-focused and heavily anchored by some of the largest retail names, such as Walmart.

This adds a defensive stability layer that is hard to replicate and ensures strong foot traffic across its sites. This also supports consistent rent collection while offering some defensive protection from market volatility during downturns.

For TFSA investors seeking to generate $300 a month in passive income, SmartCentres functions as a solid contributor. The REIT balances yield with defensive appeal to make it a solid option for any well-diversified portfolio.

As of the time of writing, SmartCentres offers investors a monthly distribution that carries a yield of 6.7%.

Boosts your portfolio’s overall yield

Allied Properties REIT (AP.UN) is the third REIT for investors to consider. Allied Properties offers a different, yet complementary role. The REIT offers a higher yield than RioCan and SmartCentres, currently 7.3%.

The focus of Allied Properties portfolio is on office and urban workspace properties. This adds diversification to the mixed-use and retail offerings of the other REITs mentioned above. Allied Properties boasts a portfolio of over 160 properties located across major metro markets in Canada.

For investors seeking a diverse portfolio that includes a broad mix of property types with a handsome yield, Allied Properties fits that bill perfectly.

How much do you need to generate $300 a month?

To reach $300 a month in passive income, investors should aim for a mix of investments across all three of the REITs mentioned above.

This helps to create a balanced structure that can not only hit that target income but also provide some growth and defensive appeal.

Here’s how to generate $300 a month from those three REIT investments.

CompanyRecent PriceTotal InvestmentNo. of SharesDividendTotal PayoutFrequency
RioCan Real Estate$20.09$20,000995$1.16$1,154.20Monthly
SmartCentres REIT$27.70$20,000722$1.85$1,335.70Monthly
Allied Properties REIT$9.82$20,0002,036$0.75$1,527Monthly
  Total:$4,016.90Monthly:$334.74 

Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool recommends SmartCentres Real Estate Investment Trust and Walmart. The Motley Fool has a disclosure policy.

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