Turn a TFSA Into $300 in Monthly Tax-Free Income

If you don’t like paying income tax, the TFSA (Tax-Free Savings Account) is the perfect account to invest with. Inside the account, you don’t pay any income tax on interest, dividends, or capital gains.

You can optimize your annual returns by as much as 20% by simply not paying income tax and keeping that capital. You can further increase long-term returns by taking your dividends/interest and reinvesting them back into the same dividend stocks.

If you are aiming for an average of $300 per month of dividend income, you would need about $90,000 invested at a 4% average annual yield.

Below is a hypothetical three stock portfolio that could help you hit that $300 per month TFSA income target. Here is how it would work.

Pembina Pipeline: A solid TFSA income stock

I would firstly put $30,000 of my TFSA cash into Pembina Pipeline (TSX: PPL). With a current price of $68.42, you could buy 428 shares. Given its $0.735 per share quarterly dividend, your investment would earn $321.93 quarterly, or $107.31 averaged monthly. That equates to a 4.3% yield today.

Pembina offers pipelines, storage, midstream facilities, processing, and export services to the Canadian energy industry. Over 85% of its income is contracted. The energy producer makes a spread on marketing sales on the remaining 15%. It just announced an increase in its guidance for 2026, so clearly it is seeing a benefit from strong energy pricing.

Pembina has a growing number of attractive growth projects, including an LNG terminal in British Columbia and a data centre power opportunity in Alberta. It is targeting 5–7% annualized contracted income growth over the coming four years, which will likely equal further dividend growth as well.

Canadian Utilities: 54 years of dividend growth

Canadian Utilities (TSX: CU) is a low-risk stock perfect for putting $30,000 to work in a TFSA. With a current price of $49.55, you could buy 605 shares. It pays a $0.46 per share quarterly dividend. Your investment would earn $278.30 quarterly, or $92.77 averaged monthly. That equals a 3.8% dividend yield.

Canadian Utilities is the mothership to ATCO Energy, ATCO EnPower, and ATCO Australia. These are all utilities focused on power/gas generation, transmission and distribution across Alberta and Australia.

Canadian Utilities is aiming for 6.9% annualized rate base growth over the coming five years. It has 54 years of dividend increases. Given its growth profile, this will likely continue in the years to come. This is a boring, albeit low-risk stock to own for income and modest capital returns over time.

Choice Properties: A steady REIT for TFSA income

A final TFSA stock to add with $30,000 is Choice Properties Real Estate Investment Trust (TSX: CHP.UN). With a price of $15.62, you could buy 1,920 shares of Choice. It has a 5.1% yield. With its $0.065 per unit monthly distribution, that investment would earn $124.80 monthly.

Choice is Canada’s largest REIT. Its main portfolio is grocery-anchored retail properties. These tend to be highly popular retail centres that offer essential services. The rest of its portfolio is quality industrial properties and mixed-use assets.

The REIT has 98% occupancy and a steady rental rate growth outlook. It is looking to add First Capital to its portfolio, which could be accretive over a long period of time. It’s a defensive REIT that pays a stable (and recently growing) dividend. It’s a great addition for a patient income-focused TFSA investor.