A $25,000 savings is a considerable amount for regular investors. You can become extremely wealthy by leveraging tax-free compounding or build an income-generating machine through the Tax-Free Savings Account (TFSA).
If the priority is to turn the money into a consistent cash flow, the simplest way is to invest in established dividend payers. For income-focused TFSA investors, a Big Bank paired with the lone real estate investment trust (REIT) in the cure sector is a rewarding combination.
Split the $25,000 between the two stocks and lock in tax-free dividend earnings for years, and keep the original investment amount untouched.
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Quarterly payouts
The Bank of Nova Scotia (TSX: BNS) has been paying dividends since 1832. This lengthy 194-year track record is already a compelling reason to invest. BNS currently trades at $102.77 per share and pays a 4.3% dividend, the highest yield among the Big Six Canadian banks. A $12,500 position will generate $133.75 in tax-free passive income every quarter.
The $127.8 billion bank did not disappoint investors at the start of fiscal 2026. In the three months ending January 31, 2026, net income rose 132% to $2.3 billion compared to Q1 fiscal 2025. Earnings per share (EPS diluted) increased to $1.73 from $0.66 a year ago.
BNS President and CEO, Scott Thomson, said, “We saw earnings growth across all of our business lines this quarter, including in Canadian Banking, where we delivered another quarter of sequential margin expansion, accelerating fee income growth, and positive operating leverage.” He looks forward to delivering on the bank’s medium-term objectives in 2027, including an above 14% return on equity (ROE).
In March 2025, BNS exited the markets in Central America and Colombia. Most major international lenders have scaled back in Latin America due to rising compliance costs and risks. Thomson intimated as early as 2023 that BNS intends to refocus on more profitable North American markets. He added that the return profile has not been commensurate with the risk, dragging overall returns.
Performance-wise, BNS has been relatively stable over the last 12 months, with a plus-62% gain. For fiscal 2026, management expects double-digit earnings expansion in 2026. With its 13% Adjusted ROE in Q1 2026, BNS is on track to surpass 14% by 2027.
Monthly distribution
Vital Infrastructure Property Trust (TSX: VITL.UN) is a new name in the real estate sector following the rebranding of North West Healthcare Properties on March 11, 2026. At $5.56 per share, the REIT pays a juicy 6.5% dividend. A $12,500 investment will produce $67.40 per month, tax-free in a TFSA.
The goal to become a focused healthcare infrastructure platform prompted the $1.4 billion REIT to rebrand. Management also decided to exit the markets in Europe and New Zealand and concentrate on North America. According to its CEO, Zach Vaughan, the strategy is to simplify the business, strengthen the balance sheet, and sharpen the focus on high-quality healthcare infrastructure.
Vital’s infrastructure-style assets include hospitals, outpatient buildings, and surgery centres. All properties offer long-term, stable, and inflation-indexed income. Thus far in 2026, VITL.UN is up 10.6% year-to-date versus the TSX’s plus-7%.
Sustained cash inflows
Your $25,000 is more than enough to build a self-sustaining cash flow machine with zero tax consequences in a TFSA. BNS will provide $133.75 every quarter, while Vital Infrastructure delivers $67.40 very month.
