Canadian residents aged 18 and above with a valid Social Insurance Number (SIN) can open a Tax-Free Savings Account (TFSA) and start contributing. There is no income requirement. But what makes the TFSA a unique investment account?
In addition to having no mandatory closure age or conversion like the Registered Retirement Savings Plan (RRSP), TFSA contribution room carries forward indefinitely. Moreover, all capital gains, interest, and dividends earned inside the account are tax-exempt.
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Set your financial goal
TFSA investors can set personal financial goals and target an income stream. If you’re aiming for $300 tax-free income every month ($3,600 per year), the capital requirement depends on the yield of your chosen dividend stock. The higher the yield, the lower the investment amount.
For example, at a 4% and 6% yield, you would need $90,000 and $60,000 in your TFSA, respectively. That principal generates your monthly $300 cash flow but remains intact and will not deplete unless you withdraw it. As of January 2026, the cumulative contribution limit is $109,000. Both investment amounts are within the maximum allowable room for Canadians eligible since 2009.
Don’t stress if you don’t have that lump sum today. Fresh contribution room is added every year ($7,000 limit in 2026), allowing TFSA users to make disciplined contributions for incremental wealth-building over time. By reinvesting dividends, you harness the power of compounding to build a $300-a-month dividend portfolio.
Monthly dividend stock
A monthly dividend-paying stock like SmartCentres Real Estate Investment Trust (TSX: SRU.UN) is a logical choice that aligns perfectly with the $300 cash-flow target. The REIT distributes dividends monthly instead of the typical quarterly payouts. As of this writing, SRU.UN’s performance is at par with the broader market, up 15% year-to-date.
At $28.41 per share and a 6.5% dividend yield, the required upfront capital is approximately $55,229. However, if a lump sum investment is not possible, you can make regular, strategic contributions up to your annual TFSA limit or available room. Your investment will eventually produce $300 tax-free income per month.
Investment takeaway
Beyond its high monthly yield, SmartCentres is a defensive holding. The $4.9 billion fully integrated REIT boasts an essential services tenant base. Its anchor tenant is American retail giant Walmart. As of June 30, 2026, the occupancy rate is 98.1%, boosted by 12% rent growth. About 86% of existing leases maturing in 2026 have been extended.
Expansion plans of recession-resilient tenants are strong tailwinds for SmartCentres. Walmart Canada plans to invest $6.5 billion in nationwide expansion by 2030. Due to improved market potential, Dollarama targets 2,000 stores by 2031. Loblaw has allocated $2.4 billion to build 70 new stores this year. Costco plans to expand in Canada over the next five years.
SmartCentres derives recurring rental income primarily from its core retail portfolio (155 of 201 properties), notably shopping centres. The average lease term to maturity is 4.2 years. Its Executive Chairman and CEO, Mitchell Goldhar, notes the continued momentum in leasing demand in Q2 2026, including very strong customer traffic and a strengthened tenant base.
Unlock $300 a month with your TFSA
Working toward $300 a month in tax-free passive income doesn’t require a massive cash outlay. The goal is achievable over time through regular contributions, a reliable monthly dividend payer, and the TFSA’s permanent tax shield.
