The Perfect TFSA Stock: A 5% Yield With Monthly Paycheques

A second paycheque normally arrives with a second boss, extra deadlines, and at least one meeting that could’ve been an email. A Tax-Free Savings Account (TFSA) holding the right monthly payer offers the cash-flow part without adding anyone to the organizational chart.

Investment income and capital gains generally grow tax-free inside a TFSA. Withdrawals also won’t increase taxable income or reduce federal income-tested benefits, making those monthly deposits particularly useful during retirement. But there are a few things to know.

Before you invest

The contribution rules still require attention. The 2026 limit is $7,000, while someone eligible every year since 2009 who has never contributed could have $109,000 of room. Unused room carries forward, but withdrawals only return as new room the following calendar year. Investors should check their own records before contributing because overpayments face a 1% monthly tax.

Monthly payments aren’t automatically better than quarterly ones. They simply match recurring expenses more neatly and allow faster reinvestment. The real work involves checking cash-flow coverage, debt, occupancy, and whether the underlying business can keep producing income.

Real estate investment trusts (REITs) can perform that job particularly well. REITs collect rent from properties and distribute much of the resulting cash to shareholders. Grocery stores, pharmacies, and warehouses can make especially useful tenants because Canadians rarely cancel dinner during an economic slowdown.

A stock to consider

Choice Properties Real Estate Investment Trust (TSX: CHP.UN) could therefore be a nice addition. Choice stock recently traded at about $16.50. Its $0.065 monthly distribution annualizes to $0.78 per unit, producing a yield of approximately 4.8%, or roughly 5% when rounded.

Choice stock is Canada’s largest REIT, with a national portfolio of retail properties, industrial facilities, and mixed-use developments. Many locations are anchored by Loblaw grocery stores and pharmacies, giving the portfolio a decidedly necessity-based flavour. Apparently, milk and prescriptions make the best rent collectors.

First-quarter occupancy remained 98.1%. Management expects annual funds from operations (FFO) between $1.08 and $1.10 per unit for 2026. Against that range, the $0.78 annual distribution would consume approximately 71% to 72% of FFO, leaving some cash for debt, development, and unexpected costs.

Looking ahead

Choice stock is also preparing to acquire approximately $5 billion of First Capital REIT’s urban retail assets as part of a larger transaction with KingSett Capital. First Capital shareholders and the court have approved the arrangement, although closing conditions remain.

The properties could expand Choice stock’s presence in densely populated Canadian neighbourhoods where grocery-anchored retail space remains difficult to replace. Existing operations are already growing, with first-quarter same-property cash net operating income increasing 3%.

At roughly 15 times the midpoint of management’s FFO guidance, the units aren’t sitting in the bargain bin. The valuation nevertheless looks reasonable for near-full occupancy, covered monthly income, and a potentially larger urban portfolio.

Bottom line

There are a few points to consider. Loblaw provides well over half of Choice stock’s rental revenue. That tenant is financially strong, yet such concentration means trouble at one company could affect a large portion of the portfolio. Higher refinancing costs, development delays, and integration problems following the First Capital transaction add further risk.

Even so, a $10,000 investment would currently produce approximately $39.85 per month. Reinvesting those payments could gradually purchase more units, allowing one of Canada’s larger monthly dividend stocks to build an increasingly useful TFSA paycheque.

No stock is perfect enough to become an entire TFSA, and distributions aren’t guaranteed. Held beside companies from other industries, however, Choice stock’s covered yield, nearly full portfolio, and expansion opportunity could keep those monthly deposits growing long after the first paycheque arrives.