A $50,000 Tax-Free Savings Account (TFSA) can do something surprisingly useful before you ever sell a share. At the right yield, it can start sending more than $200 into your account every month while the original investment remains intact.
Of course, there’s an important catch before anyone starts moving $50,000 around. The 2026 TFSA contribution limit is only $7,000. You’d need at least $50,000 of available room accumulated from previous years to contribute that amount today. Unused room carries forward, while withdrawals generally return as contribution room in the following calendar year.
For investors who have built up that room, however, a TFSA can be a terrific income machine. Investment income and withdrawals are generally tax-free, allowing distributions to either land in your pocket or be reinvested without an annual tax bill taking a nibble first. That makes a dependable monthly payer particularly interesting inside a TFSA.
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Don’t chase yield
A 10% yield may produce twice the income of a 5% yield, but that’s not terribly helpful if the distribution gets chopped six months later.
For real estate investment trusts (REITs), I’d pay particular attention to adjusted funds from operations (AFFO). Think of it as a rough measure of the recurring cash available from the property business after accounting for the spending needed to keep those buildings earning money.
If distributions consume nearly all of that cash, there isn’t much wiggle room. A lower payout ratio provides a cushion. That brings me to a REIT investors don’t talk about nearly as much as Canada’s big banks or pipelines.
CRT
CT REIT(TSX: CRT.UN) owns 380 properties encompassing roughly 32 million square feet, primarily across Canada. Many are Canadian Tire stores and related properties. That means this isn’t exactly a landlord hoping someone rents the empty unit beside an abandoned shopping-mall fountain.
Portfolio occupancy stood at 99.5% at the end of the second quarter. Meanwhile, diluted AFFO per unit increased 2.5% year over year to $0.326. More importantly for income investors, its AFFO payout ratio was just 72.7% during the quarter. That leaves a meaningful portion of recurring cash available after paying shareholders.
Management also increased the monthly distribution by 3.5% this year. The current payment is $0.0818 per unit each month, or $0.9816 annually. At a recent unit price around $18, that produces a yield of roughly 5.5%.
What you could create
With $50,000, an investor could purchase 2,777 CT REIT units while staying just below the target investment. That works out to approximately $227.16 every month, without needing to sell a unit.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| CRT.UN | $18.00 | 2,777 | $0.9816 | $2,725.90 | Monthly | $49,986.00 |
Someone who doesn’t need the income today could reinvest it instead. Each distribution could buy more units, which then produce their own distributions. That’s how relatively unexciting monthly dividend stocks can become rather exciting after enough years.
Yet CT REIT’s greatest strength is also its obvious weakness. Canadian Tire represents more than 90% of its annualized base rent. That concentration means trouble at its largest tenant would matter enormously. REITs can also struggle when borrowing costs remain elevated, since real estate requires plenty of capital.
Bottom line
Still, I like the trade-off here. CT REIT combines nearly full occupancy, a roughly 73% AFFO payout ratio, and another distribution increase with a yield around 5.5%.
A $227 monthly TFSA paycheque probably won’t fund retirement by itself. Keep reinvesting, adding contributions, and allowing those distributions to grow, though, and eventually selling shares for income may become something you can postpone for a very long time.
