How I’d Use $14,000 in a TFSA to Pocket $65 Every Month

Passive income can provide financial stability while helping investors preserve their purchasing power in an inflationary environment. Reinvesting these consistent payouts can further enhance long-term returns through compounding, helping investors reach their financial goals sooner. Among the multiple ways to generate passive income, investing in monthly dividend stocks is one of the simplest and most cost-effective strategies.

Investors can make these investments through their Tax-Free Savings Account (TFSA) to earn tax-free dividend income and capital gains on eligible investments, subject to contribution limits. For 2026, the Canada Revenue Agency has maintained the TFSA annual contribution limit at $7,000, while the cumulative contribution room for eligible investors stands at $109,000.

By investing $14,000 and splitting it equally between the following two monthly dividend stocks, investors can generate more than $65 in passive income each month while retaining the potential for long-term capital appreciation. Let’s take a closer look at these two stocks.

SmartCentres Real Estate Investment Trust

SmartCentres Real Estate Investment Trust (TSX: SRU.UN) is one of the top monthly dividend stocks for income-focused investors, thanks to its strategically located portfolio, high-quality tenant base, and attractive yield. The REIT owns and operates approximately 200 properties across Canada, with 95% of Canadians living within 10 kilometres of a SmartCentres property. Its tenant base is also highly resilient, with about 90% of tenants having a national or regional presence and roughly 80% providing essential goods or services.

These strengths support consistently high occupancy and rent collection rates, resulting in stable, predictable cash flows. The REIT should also benefit from ongoing lease-up activity and higher rental rates as leases are renewed. Backed by these reliable cash flows, SmartCentres currently pays a monthly distribution that yields 6.2%.

Meanwhile, SmartCentres continues to expand its asset base to capitalize on rising demand for retail and mixed-use real estate. It currently has approximately 0.8 million square feet under construction, including a 200,000-square-foot retail property that is fully pre-leased to Canadian Tire, as well as self-storage facilities in Quebec and British Columbia.

The REIT also has a substantial long-term development pipeline, with approximately 87 million square feet of projects in various stages of planning and development. Supported by resilient cash flow generation, an attractive yield, and a visible growth pipeline, SmartCentres appears well-positioned to continue delivering reliable monthly distributions, making it an ideal stock for income-seeking investors.

Peyto Exploration & Development

Another monthly dividend stock that I believe deserves investors’ attention is Peyto Exploration & Development (TSX: PEY), which operates natural gas and natural gas liquids in Alberta. The company’s low-cost operations, long-life reserve base, disciplined capital allocation, and efficient operating model have enabled it to deliver consistently strong financial performance. Over the past 27 years, Peyto has generated an average return on capital employed (ROCE) of 17% and an average return on equity (ROE) of 24%.

Its strong financial performance has also translated into meaningful shareholder returns. Since 1998, Peyto has returned approximately $3.4 billion through dividends and currently pays a monthly dividend of $0.12 per share, yielding 5.6% on an annualized basis.

The company’s growth outlook remains favourable. Elevated natural gas prices, supported by ongoing geopolitical tensions in the Middle East, provide a positive backdrop for earnings and cash flow. At the same time, Peyto is strengthening its production capabilities through capital investments of $540–$600 million this year, including drilling 70–80 net horizontal wells. With 1.5 billion barrels of oil equivalent in proved and probable reserves, the company has a substantial inventory of high-quality development opportunities.

Backed by its low-cost asset base, disciplined capital allocation, strong reserve position, and favourable industry fundamentals, Peyto appears well-positioned to continue generating healthy cash flows and rewarding shareholders with attractive monthly dividends, making it a compelling choice for income-focused investors.