A TFSA Stock With a 5.4% Yield and Reliable Monthly Paycheques

A beaten-down Canadian REIT could turn TFSA contribution room into steady, tax-free monthly cash while you wait for real estate sentiment to improve.

Key Points
  • H&R pays monthly and currently yields about 5.4%, giving TFSA investors consistent tax-free cash flow.
  • The payout looks covered, with Q1 2026 payout ratios near the mid-50% to mid-60% range.
  • Units trade well below reported net asset value, but office exposure and debt are the big risks.

Monthly income feels different from quarterly income. That’s why real estate investment trusts (REITs) can be so useful inside a Tax-Free Savings Account (TFSA). The cash arrives regularly, it can be reinvested automatically, and it can turn unused contribution room into a tax-free income machine.

Canadian Dollars bills

Source: Getty Images

HR

H&R Real Estate Investment Trust (TSX: HR.UN) is one of those stocks. It pays monthly, owns a large North American real estate portfolio, and trades below its reported net asset value. For TFSA investors looking for reliable cash flow, that combination deserves attention.

H&R is one of Canada’s larger REITs, with $8.1 billion in total assets as of March 31, 2026. Its portfolio includes residential, industrial, office, and retail properties across North America. That diversification is useful because no single property type drives the entire business.

The monthly payout is the main draw. H&R pays $0.05 per unit each month, or $0.60 annually, coming to a yield of 5.4% at writing. For a $10,000 TFSA investment, that could mean about $540 a year in tax-free income, depending on the purchase price. That works out to roughly $45 a month.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENT
HR.UN$11.14897$0.60$538.20Monthly$9,992.58

That may not sound life-changing. But in a TFSA, monthly cash flow can do real work. It can buy more units, fund another stock, build a small cash cushion, or help investors slowly create a portfolio that pays them back every month.

Numbers remain strong

The payout also looks reasonably covered. In the first quarter of 2026, H&R’s payout ratio was 55.1% of funds from operations and 64.1% of adjusted funds from operations. Those are important numbers. A high yield only works if the REIT has enough cash flow to support it.

H&R’s valuation also looks interesting. The REIT reported a net asset value of $15.96 per unit at the end of the first quarter. The units have traded well below that level. For patient TFSA investors, that gap suggests the market may still be discounting the portfolio because of office exposure, debt concerns, and broader REIT pessimism.

What’s more, that discount is part of the opportunity. H&R has spent the last few years reshaping itself. It has sold assets, reduced debt, and moved more toward residential and industrial properties while still holding office and retail. The strategy isn’t finished, but the direction makes sense. Investors generally prefer REITs with more exposure to apartments, logistics, and necessity-based retail than traditional office towers.

Looking ahead

The residential side gives H&R exposure to rental housing demand. The industrial assets can benefit from logistics, warehousing, and supply-chain needs. Retail can still work when properties are well located, and tenants remain steady. Together, those segments give the REIT several ways to generate income.

The biggest risk is office real estate. Some office properties remain under pressure because of hybrid work, tenant downsizing, and higher leasing costs. H&R also carries debt, which matters for any REIT in a higher-rate environment. If financing costs rise or asset sales disappoint, the units could remain under pressure.

Investors should also remember that REIT distributions aren’t guaranteed. H&R has cut its payout before, so this isn’t a risk-free monthly cheque. The current payout coverage looks healthier, but the past is still worth respecting. Even with those risks, H&R looks attractive for income-focused TFSA investors. The monthly distribution is useful, the payout ratio looks manageable, and the valuation still reflects plenty of caution.

Bottom line

This isn’t the kind of stock investors buy for explosive growth. It’s a cash-flow stock built for investors who want tax-free monthly income and are willing to wait while the real estate market improves.

At today’s price, H&R still offers a strong monthly payout, a discounted real estate portfolio, and a clear role inside a passive-income TFSA.

Fool contributor Amy Legate-Wolfe 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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