The Canada Revenue Agency (CRA) makes you contribute 5.95% of your income to the Canada Pension Plan (CPP) and then get a payout after age 65. There, you have no control over how much you can contribute, where, or how much payout you can get. Moreover, the payouts are taxable. Canada has some good passive-income stocks that you can add to your portfolio. Their monthly payouts are assured and relatively safer than growth stocks. One 6.5% monthly passive-income stock can help you take control of your payouts, and even make them tax-free if invested through a Tax-Free Savings Account (TFSA).
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The 6.5% monthly passive-income stock
SmartCentres REIT (TSX:SRU.UN) is a good addition to your monthly passive income, given its 22-year history of paying regular dividends. It has even grown dividends in a few years, but its strength is in its payout stability and a 6.5% dividend yield, even when the real estate investment trust (REIT) has surged to its 52-week high. A 6.5% yield is an attractive payout in the current market environment.
A little over $3,000 investment can buy 105 units of the REIT at $28.4, which can give an annual dividend of $194. It converts to a monthly payout of $16.34. You can keep adding 100 units every year to this portfolio and convert the annual payout to a monthly payout in 13 years. Here’s how.
| Year | Accumulated Units | Dividend per share | Annual Dividend Income | Monthly Passive Income |
| 2026 | 106 | $1.85 | $196.10 | $16.34 |
| 2027 | 206 | $1.85 | $381.11 | $31.76 |
| 2028 | 306 | $1.85 | $566.11 | $47.18 |
| 2029 | 406 | $1.85 | $751.12 | $62.59 |
| 2030 | 506 | $1.85 | $936.12 | $78.01 |
| 2031 | 606 | $1.85 | $1,121.12 | $93.43 |
| 2032 | 706 | $1.85 | $1,306.13 | $108.84 |
| 2033 | 806 | $1.85 | $1,491.13 | $124.26 |
| 2034 | 906 | $1.85 | $1,676.14 | $139.68 |
| 2035 | 1006 | $1.85 | $1,861.14 | $155.10 |
| 2036 | 1106 | $1.85 | $2,046.14 | $170.51 |
| 2037 | 1206 | $1.85 | $2,231.15 | $185.93 |
| 2038 | 1306 | $1.85 | $2,416.15 | $201.35 |
We assume the dividend per unit remains stable. However, it could increase based on the REIT’s performance.
Is SmartCentres REIT’s monthly passive income safe?
SmartCentres REIT is Canada’s largest retail REIT with a portfolio of 198 properties worth $12.1 billion.
Its portfolio comprises large open-format shopping centres with significant land holdings. Its core property is retail stores that are strategically located at key intersections across Canada. Its biggest tenant is Walmart, accounting for 23% of its rental income. SmartCentres is using the open space around its stores to build new stores, self-storage, residential, office, and industrial facilities. It is also building condos and townhomes, thereby converting shopping centres into city centres.
SmartCentres sells condos and townhomes for a profit and leases other properties. This complements its open-format stores by increasing the footfall. However, this strategy needs stringent financial discipline as construction delays or a slowdown in residential sales will add to the REIT’s cost. Thus, the status of the construction work of major projects could fluctuate the unit price.
The REIT has pre-sold around 93% of the 340 units being constructed in the ArtWalk condo Tower A in the Vaughan Metropolitan Centre. Such pre-sales help the REIT fund the projects.
This intensification concept helped SmartCentres grow its distributions by an average annual rate of 3% between 2015 and 2020, when the real estate market was booming. However, the pandemic affected most retail REITs and forced them to slash dividends. SmartCentres managed to keep dividends stable through strong financial discipline.
SmartCentres pays dividends from the adjusted funds from operations, which excludes all non-recurring items such as proceeds from the sale of condos and townhomes. The REIT has been improving its dividend-payout ratio from 91.7% in 2024 to 89.2% in 2025 by increasing net income from the same property.
Investor takeaway
SmartCentres’ financial discipline will help it stay resilient in weak macroeconomic conditions. At the same time, its robust project pipeline will help it increase its rental income and net asset value of properties in a strong economy.
