An Ideal TFSA Stock With a Steady 4.7% Yield

A top Canadian REIT with a proven dividend track record and steady yield is an ideal holding in a TFSA.

Key Points
  • CAPREIT (TSX:CAR.UN) is Canada’s leading residential REIT—an income‑focused, scale landlord offering a 4.66% yield and uninterrupted monthly dividends since 1998.
  • Its large, well‑located portfolio has high occupancy (~97%) and rising rents (AMR +2.9% YoY), keeping cash flows resilient as mortgage‑rate pressure keeps buyers renting.
  • Q1 2026 showed rental revenue +2%, Canadian NOI +3.5% and FFO of $0.595 (with projected 3.5% FFO growth through 2031), supporting steady, tax‑sheltered TFSA income.

When it comes to building a resilient Tax-Free Savings Account (TFSA), Canada’s Big Banks and energy giants are likely anchors of the average investor’s portfolio. However, if the objective is to diversify and move away from staples in both heavyweight sectors, I’m inclined to go with real estate, particularly residential real estate.

An ideal TFSA stock is a real estate investment trust (REIT) providing a non-discretionary need: human shelter. Canadian Apartment Properties Real Estate Investment Trust (TSX: CAR.UN),or CAPREIT, is the king of the Canadian residential rental market.

Income-focused TFSA investors can lock in a blue-chip apartment landlord and feast on the steady 4.7% yield. CAR.UN trades at $33.36 per share. Assuming you buy 300 shares ($10,008), your investment will generate $38.86 per month ($466.37 annually).

A woman stands on an apartment balcony in a city

Source: Getty Images

Size and scale

CAPREIT’s portfolio is massive and well-located in urban centres across Canada. This $5.4 million REIT owns and operates multi-unit residential properties, including apartment buildings and townhomes. Its President and CEO, Mark Kenney, confirmed that the REIT remains focused on recycling capital to advance ongoing portfolio optimization and enhance earnings.

Kenney announced in December 2025 that the transformation is ongoing. The objectives are to further strengthen the quality and cash flow performance of CAPREIT’s irreplaceable rental apartment portfolio in Canada. Also, the REIT acquired highly strategic, prime-located assets with strong return profiles last year, totaling $659 million.

Solid start in 2026

According to the Canadian Real Estate Association (CREA), home sales activity has slowed due to rising global economic uncertainty. Buyers are also waiting for mortgage rates to come down. This will keep potential buyers in the rental market and benefit CAPREIT.  

In Q1 2026, CAPREIT’s Canadian residential same property portfolio was 97.1%, with turnover weighted toward shorter-term leases. “From an operational standpoint, results in the first quarter were sound amid current pressures in the sector,” added Stephen Co, Chief Financial Officer of CAPREIT. Rental revenues in the three months ending March 31, 2026 increased 2% to $227.7 million compared to Q1 2025.

Net operating income (NOI) of the Canadian portfolio rose 3.5% year-over-year to $149.8 million. The $265.1 million fair value loss during the quarter represents a downward revaluation of property values, not actual cash lost. IFRS accounting rules require REITs to adjust the value of their real estate portfolios every quarter based on current market conditions.

However, the Funds from Operations (FFO), the real picture, increased to $0.60 per unit compared to $0.585 a year ago. The projected FFO per share growth is 3.5% annually through 2031. The same property Canadian residential Occupied Average Monthly Rent (AMR) was up by 2.9% to $1,726 from $1,677 on March 31, 2025.

Proven track record

CAPREIT has attracted investors owing to its consistent, uninterrupted monthly dividend payments since 1998. There was never a cut, even during the global pandemic and recent financial crises. The high occupancy rate indicates stability and reinforces the defensive nature of its property portfolio.

The predictable monthly cash dividends from this reputable REIT, along with the steady yield, should be more than satisfactory to income-focused TFSA investors.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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