The Tax-Free Savings Account (TFSA) is one of the best ways to establish a long-term monthly income stream. Part of the reason for that is because contributions and distributions remain tax-free, which allows compounding to supercharge your portfolio.
The question then becomes, what investments can investors add to their TFSA portfolio to generate that desired monthly income?
There’s no shortage of great options to consider. And given a $14,000 initial seed, here are the two picks that I would choose to maximize that monthly income potential.
This approach keeps the focus on generating reliable, tax-free monthly income while maintaining a simple, easy-to-manage TFSA strategy.
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Option #1: Retail-anchored stability for monthly income
The first option for investors seeking monthly income is Slate Grocery REIT (TSX:SGR.UN). Slate operates a portfolio of over 100 grocery-anchored retail properties across markets in the U.S.
The appeal of a grocery-anchored real estate investment trust can’t be understated. Groceries are necessities that people can’t do without. That essential nature makes Slate one of the most defensive options for investors to consider right now.
The sheer necessity that Slate’s tenants cater to translates into higher foot traffic at its properties. That in turn leads to higher rents, and by extension, support for Slate’s monthly distribution.
The other less obvious point to note is that Slate’s properties also include smaller secondary properties. These secondary properties can include anything from banks and restaurants to pharmacies and medical offices.
They also benefit from the higher traffic to the primary grocery tenant, leading to higher occupancy and stronger results.
This combination of essential retail demand and consistent occupancy helps support Slate’s ability to maintain a stable monthly distribution.
Perhaps the best reason for investors to consider Slate right now is for the monthly distribution that it offers. As of the time of writing, Slate offers an appetizing yield of 7.29%.
Option #2: Balanced retail and residential income
RioCan Real Estate (TSX:REI.UN) is one of Canada’s largest REITs. Historically, the REIT has focused its portfolio on commercial retail sites, but in recent years, RioCan has pivoted to include mixed-use residential properties.
The mixed-use properties offer investors some diversification from commercial retail by introducing residential properties into the mix. Even better, the residential towers are built atop of several floors of retail. This provides a steady stream of foot traffic to the retail sites.
Adding to that appeal is location. The mixed-use properties are located in Canada’s major metro markets, where demand and rents are higher, and supply is significantly lower. The properties themselves are also situated along transit corridors, which adds to the demand for those sites.
By blending residential and retail income sources, RioCan creates a balanced foundation for steady monthly cash flow.
Turning to income, RioCan offers investors a respectable yield of 5.34%. Like Slate, RioCan pays that distribution on a monthly cadence, making the REIT ideal for investors who are seeking a monthly income.
What your TFSA monthly income could look like
A $14,000 TFSA that’s split between both Slate Grocery and RioCan Real Estate can create a simple, predictable monthly income stream.
Here’s how that income stream will look with $7,000 allocated to each REIT.
| Company | Recent Price | No. Of Shares | Dividend | Annual Payout | Monthly Payout |
| Slate Grocery REIT | $16.22 | 431 | $1.18 | $508.52 | $42.38 |
| RioCan Real Estate REIT | $21.66 | 346 | $1.16 | $401.36 | $33.45 |
For both stocks, the amount of that monthly income isn’t enough to retire on. What it does provide, however, is something just as powerful.
In short, the monthly distribution from each REIT is sufficient to generate a new share (or several) every month from reinvestments alone. And because all distributions compound tax-free inside the TFSA, even modest monthly payouts can snowball into a much larger income stream over time.
In my opinion, one or both REITs should be in every TFSA.
Buy them, hold them, and watch them (and your income) grow.
