A 5% Monthly Payer I’d Buy for My TFSA: About $100 a Month on $24,000

Canada’s largest residential landlord offers a high yield, reliable monthly income, and a tax-sheltered foundation for TFSA investors.

Key Points
  • CAPREIT offers a 5% distribution yield with monthly tax-free income potential for investors holding units in a TFSA.
  • A $24,000 investment could generate approximately $1,200 in annual distributions, supported by nearly 98% occupancy and a 62% FFO payout ratio.
  • Despite near-term market pressures, CAPREIT’s residential real estate portfolio and recurring rental income may help sustain distributions over the long term.

Canadians use or contribute to their Tax-Free Savings Accounts (TFSAs) to create recurring, tax-free passive income. Many account holders deposit and invest as early as January to maximize tax-free growth, although contributions happen throughout the year. However, investing in the last quarter also works if you want immediate cash flow during the holiday season (and beyond).

A good TFSA holding to start the fourth quarter is Canadian Apartment Properties (TSX: CAR.UN) or CAPREIT. This real estate investment trust (REIT) trades at $31.07 per unit and pays a 5% dividend yield. You will receive recurring monthly income and allow your investment to compound tax-free.  

Suppose your available TFSA contribution room is $24,000; the money will generate about $100 per month ($1,200 annually) in tax-free distributions. Invest before the October 30, 2026 ex-dividend date to receive the first monthly distribution on November 16, 2026.

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.

Source: Getty Images

Market leadership in residential real estate

CAPREIT is Canada’s largest residential landlord. The $4.9 billion vertically integrated REIT also operates properties in the U.S. and Europe, focusing on multi-family development. Since its founding in 1993, it has achieved substantial scale and today boasts market leadership in residential real estate.

The REIT beats smaller property managers through three competitive advantages. CAPREIT consistently maintains a high occupancy rate of nearly 98% due to ongoing demand across major Canadian metropolitan markets. The diversified revenue base reduces localized economic risks. Operational efficiency has been its hallmark for over three decades now.

Because shelter is an essential need, residential demand helps CAPREIT to remain resilient even during economic slowdowns and deliver predictable, recurring operational revenue. Newly appointed President and CEO Brad Cutsey believes long-term fundamentals support the business.

Distribution safety

In the first half of 2026, CAPREIT reported a net loss of $246.4 million versus $82.5 million net income from a year ago due to soft market conditions and near-term pressure on market fundamentals. Nonetheless, the 62% funds from operations (FFO) payout ratio during the period indicates strong cash flow coverage and ample cushion to protect and sustain its generous monthly distributions.

The low payout ratio leaves room for CAPREIT to renovate or upgrade existing apartments, strengthen its balance sheet, and navigate changing interest rate environments. Stephen Co, Chief Financial Officer of CAPREIT, notes the strong 66.4% net operating income (NOI) margin in Q2 2026.

“Rent growth continues to be supported by lease renewals and the positive mark-to-market opportunity embedded across the portfolio,” he added. Note that for residential REITs, key stability metrics are occupancy rate, steady demand, and turnover strength, not the weighted average lease term (WALT). Because tenant contracts are short-term (one year or month-to-month), CAPREIT can capture higher market rents when tenants vacate.

Ideal TFSA holding

Consider holding CAPREIT in your TFSA to maximize the benefits of its high yield and monthly distribution. The REIT has paid monthly cash dividends to unitholders since 1997. Moreover, you gain substantial tax shelter with the real estate investment. Who knows, you might even adopt a seasonal strategy and make it your personal Q4 TFSA pattern.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

customer fills up car with gasoline
Dividend Stocks

How Much Emergency Money Do Canadians Actually Need?

A safety fund equivalent to 3 to 6 months of living expenses is generally the baseline buffer that Canadians would…

Read more »

woman holding steering wheel is nervous about the future
Dividend Stocks

Still Up Double Digits This Year: Should You Still Invest in TSX Stocks After Thursday’s Dramatic Drop?

The TSX has gained about 136% over the past decade. So, stay invested, dollar‑cost average, and maintain diversification. 

Read more »

Real estate investment concept
Dividend Stocks

Intact Stock: Would I Buy It for Growth, Income, or Both?

Intact’s modest yield makes profitable long-term growth the main attraction, with catastrophe losses putting the next purchase to a test.

Read more »

hiker with backpack in the mountains
Dividend Stocks

2 Top Canadian Dividend Stocks for $1,850 in Annual Passive Income

With reliable cash flows, high dividend yields, and strong growth prospects, these two Canadian stocks suit income-seeking investors.

Read more »

Data center woman holding laptop
Dividend Stocks

3 Canadian Data Centre Stocks to Buy Now, Ranked

Three Canadian stocks offer strategic exposure to the AI buildout and in-demand data centres.

Read more »

people sit in two wooden beach chairs facing the Caribbean ocean holding drinks and making a toast
Dividend Stocks

Is Manulife Worth Buying for Its Dividend for Retirement Income?

Manulife Financial (TSX:MFC) stock looks like a bargain buy for retirees seeking strong, growing dividends.

Read more »

diversification and asset allocation are crucial investing concepts
Dividend Stocks

How I’d Use $500 a Month to Build a Dividend Portfolio Before Retirement

A $500 monthly habit can build retirement income through contributions, reinvestment, and businesses that keep cash after their payouts.

Read more »

Colored pins on calendar showing a month
Dividend Stocks

CT REIT vs. SmartCentres: Which Monthly Payer Fits a TFSA Better?

CT REIT offers a larger payout cushion, while SmartCentres produces more monthly cash from the same investment.

Read more »