I’d Convert a $16,000 TFSA Into $93 in Reliable Monthly Cash. Here’s How.

If I had $16,000 in available contribution room in my Tax-Free Savings Account (TFSA), I’d look to put that money to work in high-quality dividend stocks to generate regular income. The goal would be to build a steady stream of tax-free monthly cash while allowing the investment to grow over time.

Of course, dividends are never guaranteed. That’s why I’d focus on fundamentally strong companies with stable cash flows, sustainable payout ratios, and a long history of rewarding shareholders across different market environments. These TSX stocks are well-positioned to continue paying reliable dividends.

Here are two Canadian dividend stocks I’d consider buying to help turn a $16,000 TFSA into a reliable source of monthly cash.

Monthly dividend stock #1

SmartCentres REIT (TSX: SRU.UN) is a reliable dividend stock that rewards investors with monthly cash distributions.  The REIT has a strong track record of consistent payouts. It currently pays a monthly distribution of $0.15 per unit, yielding about 6.2%. More importantly, these payments are backed by a high-quality real estate portfolio and stable cash flow.

The REIT owns nearly 200 strategically located properties that continue to attract strong leasing demand and maintain high occupancy levels. These assets generate reliable net operating income (NOI) and funds from operations (FFO), covering its monthly distributions. In addition, SmartCentres benefits from a diversified tenant base with strong financial profiles, helping keep rent collections high while reducing the risk of payment defaults.

SmartCentres’ occupancy stood at an impressive 97.6% at the end of the first quarter. Meanwhile, leasing activity also remained healthy, with about 80% of 2026 lease renewals already completed. Renewal rents for non-anchor tenants increased by 11.5%, supporting its earnings and payouts. Further, rent collections remained close to 99%.

Looking ahead, SmartCentres is well-positioned to continue growing its FFO, driven by ongoing strength in its retail portfolio, mixed-use development pipeline, and extensive landholdings. Overall, its high and reliable yield is likely to enhance a portfolio’s income potential.

Monthly dividend stock #2

Firm Capital Mortgage Investment Corporation (TSX: FC) is another TSX stock I’d consider to generate monthly cash. Its high yield of 7.8% and steady monthly payouts make it a compelling investment. In addition to its regular distributions, the company has rewarded investors with special year-end dividends.

Firm Capital specializes in short-term financing and conventional mortgage lending across both residential and commercial real estate markets. Its lending portfolio includes construction loans, bridge financing, mezzanine debt, and equity investments.

What sets the company apart is its focus on niche lending opportunities that traditional banks often underserve. This strategy has enabled Firm Capital to build a business that generates stable cash flow, helping support its consistent monthly dividend payments. At the same time, its diversified mortgage portfolio and disciplined underwriting practices have allowed it to deliver steady operating performance across different economic environments.

Looking ahead, Firm Capital appears well-positioned to maintain its payouts. Its diversified loan portfolio, relatively short-duration mortgage investments, and growing fee-based income should continue to provide a solid foundation for generating stable cash flow and supporting future dividends.

Earn over $93 in monthly tax-free dividend income

SmartCentres REIT and Firm Capital Mortgage Investment Corporation are dependable income investments that offer monthly distributions and attractive dividend yields.

At their current payout rates, investing $16,000 evenly between these two dividend-paying stocks could generate more than $93 in tax-free monthly income, or approximately $1,118 per year, when held in a TFSA.