I’d Put An Entire Year’s TFSA Room Into This 5.5% Dividend Stock for $32 Monthly in Retirement Income

With limited or no regular employment income, retirees often rely on passive income to meet their day-to-day expenses. Monthly dividend-paying stocks can provide a convenient source of regular cash flow. However, dividend payments depend on a company’s financial performance, cash flow generation, and management decisions. Therefore, retirees should prioritize established businesses with reliable cash flows and a consistent dividend-payment track record. Against this backdrop, I believe CT Real Estate Investment Trust (TSX: CRT.UN) could be an attractive investment for income-seeking retirees.

Investors can also hold eligible investments within a Tax-Free Savings Account (TFSA) to earn tax-free returns, subject to their available contribution room and applicable rules. For 2026, the Canada Revenue Agency has set the annual TFSA contribution limit at $7,000. Investing this amount in CT REIT could generate approximately $32 in monthly passive income, based on its current distribution rate. Let’s examine the REIT’s business model, recent financial performance, and growth prospects to assess its investment potential.

CT REIT’s operations and second-quarter earnings

CT REIT owns a diversified portfolio of 380 properties across Canada, spanning approximately 32 million square feet of gross leasable area. Canadian Tire, its anchor tenant, leases about 92% of the portfolio, providing a dependable source of rental income. Long-term leases and a high-quality tenant base further enhance income stability, supporting consistently strong occupancy and rent collection. At the end of the second quarter, the REIT reported a weighted average lease term of 6.9 years and an occupancy rate of 99.5%.

The REIT also benefits from a lean cost structure, with general and administrative expenses accounting for just 3% of second-quarter revenue. Its in-house property management platform, cost-recovery agreements, and strategic insourcing initiatives help contain expenses, improve operating efficiency, and protect profitability.

These strengths were reflected in its latest financial results. CT REIT’s net operating income (NOI) increased 4.8% year over year to $124.7 million, driven by contractual rent escalations, acquisitions, and development activity over the preceding four quarters. Meanwhile, adjusted funds from operations (AFFO) reached $78 million, while AFFO per unit rose 2.5% year over year to $0.33, highlighting continued growth in its underlying cash-generating capacity.

CT REIT also maintains a solid liquidity position to support its operations and future investments. At the end of the second quarter, it had $311 million in cash and access to an undrawn committed bank credit facility, along with a $187 million uncommitted revolving credit facility from Canadian Tire. Its interest coverage ratio was a healthy 3.5 times, indicating reasonable capacity to meet interest obligations. Taken together, its stable rental income, improving operating performance, and available liquidity position the REIT to pursue development opportunities and acquisitions while supporting its distributions.

Let’s examine CT REIT’s growth prospects and the opportunities that could drive its performance in the years ahead.

CT REIT’s growth prospects

Amid rising economic activity and elevated construction costs constraining new supply, demand for Canadian retail space remains resilient, creating a supportive environment for retail REITs. Capitalizing on these favourable conditions, CT REIT continues to expand its portfolio, with development projects valued at $354 million and spanning approximately 518,000 square feet.

Beyond its existing development pipeline, the REIT benefits from preferential rights to participate in developing Canadian Tire-owned properties, giving it access to additional growth opportunities. Since going public, CT REIT has acquired and leased back approximately 2 million square feet of properties to Canadian Tire, with another 10 to 15 properties in its acquisition pipeline. It is also exploring opportunities to acquire properties leased by Canadian Tire but currently owned by third parties. With approximately 25% of Canadian Tire-leased properties owned by external entities, this strategy offers a substantial avenue for future portfolio expansion.

Combined with its disciplined cost management and efficient operating structure, these growth initiatives could support steady increases in earnings and cash flow over the coming years. Overall, CT REIT’s development pipeline, acquisition opportunities, and strong relationship with Canadian Tire underpin its promising long-term growth outlook.

Investors’ takeaway

Since going public in 2013, CT REIT has consistently paid monthly distributions, reflecting the resilience of its underlying business. Its current monthly distribution of $0.08 per unit offers a forward yield of approximately 5.5%. Supported by stable rental income, a high-quality tenant base, and long-term growth opportunities, CT REIT could be a compelling option for retirees seeking a dependable stream of monthly income.