The Tax-Free Savings Account (TFSA) ranks high in terms of flexibility and tax efficiency. Account holders, even without proof of income, can create serious wealth over time. However, for those seeking to address immediate financial needs such as boosting their monthly budget, the TFSA can act as a passive-income engine.
The TFSA is most effective when you hold income-producing assets that can generate tax-free monthly income streams. The payouts become a habitual financial reward if you continue utilizing your available contribution room. Withdrawals are tax-free, too, when you collect dividend earnings.
Source: Getty Images
The $250/month blueprint
A duo that offers a high-yield, purely monthly cash flow is Cardinal Energy (TSX:CJ) and SmartCentres REIT (TSX:SRU.UN). Given the 6.54% average dividend yield, you’d need $45,872 capital, split between the energy stock and the real estate investment trust (REIT), to produce $250 in tax-free monthly income outright.
If upfront capital isn’t possible, the timeline to reach the goal depends on your contributions and the reinvestment of all dividends. Assuming a yearly contribution of $7,000 ($3,500 per asset) or the 2026 TFSA maximum annual limit, it would take 5.5 years to reach the point where you can collect $250/month perpetually. Your total TFSA balance after six years is $48,080 (only a $4,200 contribution in year six).
Cash flow engine
Cardinal Energy benefits from rising oil prices and global supply disruptions in 2026. Performance-wise, the small-cap stock is up 27% year to date. At $10.84 per share, the dividend yield is 6.64%. Currently, the $1.88 billion Canadian oil and natural gas company generates more than enough cash flow to cover monthly dividends.
The company expects crude oil prices to remain volatile amid geopolitical uncertainty in the Middle East, but will maintain the $160 million capital budget in 2026. If crude oil prices are robust than the US$60 per barrel forecast, Cardinal Energy will use the incremental free cash flow to increase its conventional asset expenditures.
Cardinal Energy commits to an attractive and sustainable return of capital through dividends. Its low-decline conventional assets and growing pipeline of future thermal prospects provide a compelling growth outlook. Moreover, the second major steam-assisted gravity drainage (SAGD) project is scheduled to come online in the second half of 2027.
The board of directors has approved the reinstatement of the monthly dividend in June 2022. CJ hasn’t missed a monthly payout since.
Defensive anchor
SmartCentres complements a cash flow engine like Cardinal Energy. The $4.9 billion fully integrated REIT owns and operates 198 properties across Canada. American retail giant Walmart, the anchor tenant in 114 shopping centres, accounts for 22.8% of total revenue. The in-place and committed occupancy rate at the close of the fourth quarter of 2025 is 98.6%.
Shopping centres and retail properties, along with apartments and offices, deliver recurring income. Development income comes from townhouses and condominiums. Space for logistics, digital signage, and electric vehicle charging are among the value-added services.
As of April 17, 2026, SRU.UN outperforms the TSX year to date, up 13.4% versus 8.3%. At $28.71 per share, the REIT pays a juicy 6.44% dividend.
Proven usefulness
The usefulness of the TFSA includes building a tax-exempt second salary for Canadians in need of additional income. Cardinal Energy and SmartCentres form a formidable two-stock income portfolio that can help TFSA users earn perpetual monthly income.
