The Perfect TFSA Stock: 3.2% Yield Paying Cash Every Month

Monthly TFSA income can be satisfying, but it only works when the dividend is backed by real cash flow.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published July 16, 10:30 am EDT

| More on: NPI

Key Points

TFSA investment income is generally tax-free, making monthly dividends more valuable when you can reinvest them.
Northland Power pays $0.06 monthly after a reset, aiming for a more sustainable payout.
Its cash flow is improving and demand for electricity is rising, but project execution risk remains.

Monthly cash in a Tax-Free Savings Account (TFSA) feels like a small act of rebellion against tax season. It shows up, it can be reinvested, and it does not ask to be included in taxable income — lovely behaviour, really. If more financial products acted like that, we would all be calmer people with better snacks.

What’s more, income earned in a TFSA, including interest, dividends, and capital gains, is generally tax-free, even when withdrawn. That makes the account especially useful for investors who want income now, growth later, or a future stream of cash that does not come with a tax bill tucked inside like a nasty little surprise.

The catch is quality. A monthly dividend can look beautiful on a calendar, but investors still need to ask what supports it. A huge yield without enough cash flow can turn into a dividend cut faster than you can say “why is my passive income suddenly less passive?” That brings us to Northland Power (TSX:NPI).

arrows hit bullseye on target — Source: Getty Images

NPI

NPI stock is a Canadian power producer with assets across offshore wind, onshore wind, solar, battery storage, natural gas, and utilities. It is not a pure-play renewable darling with no bumps. It’s a global power operator trying to balance growth, debt, construction, and shareholder returns.

The bigger trend supports the business. The Canada Energy Regulator’s 2026 outlook says electricity shows the largest percentage increase in demand across all scenarios from 2023 to 2050, ranging from 26% to 84%. It also says data centre load growth is one key assumption shaping electricity demand.

That is why power producers remain worth watching. Canada and other markets need more electricity, more storage, and more flexible capacity. Artificial intelligence (AI), electrification, industry, and heating all want power. Apparently, everything wants power now. Even the economy has a charging cable.

Numbers don’t lie

For income investors, NPI stock’s monthly dividend is the headline. The company’s dividend history shows monthly 2026 payments of $0.06 per share, including payments scheduled for June, July, and August. That works out to $0.72 annually, currently yielding 3.24% at writing. That is lower than some investors may remember, because NPI stock reset the dividend from the old $0.10 monthly level. Painful? Yes. Reckless? Not necessarily.

A lower dividend can make more sense if it gives the company room to fund major projects and protect the balance sheet. In NPI stock’s case, management expects 2026 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.45 billion to $1.65 billion and free cash flow of $1.05 to $1.25 per share.

The latest quarter also helped. NPI stock reported adjusted EBITDA of $427 million in the first quarter of 2026, up 18% from the year before. Free cash flow rose 16% to $182 million. Those are the numbers investors should watch, because dividends need cash, not wishful thinking in a nice blazer.

Looking ahead

The company also has growth underway. NPI stock progressed construction on the 1.1-gigawatt (GW) Baltic Power project and the 1.0-GW Hai Long offshore wind project, while adding battery storage projects in Poland. Those assets could help lift earnings as they move into operation, but construction projects rarely come with perfect timing and zero headaches.

The risk is execution. NPI stock faces project delays, cost overruns, interest-rate pressure, currency swings, weak wind resources, and regulatory uncertainty. The dividend cut also reminds investors that monthly income is never guaranteed, even from a long-running payer.

Still, NPI stock looks like a reasonable TFSA income stock for patient investors who want monthly cash without chasing a scary yield. The payout now looks more realistic, the business connects to rising electricity demand, and the company has projects that could support future cash-flow growth.

Bottom line

For TFSA investors, perfection does not mean flawless. It means useful. NPI stock offers tax-free monthly income today, plus exposure to an electricity trend that still has years to run.