An Ideal TFSA Stock for October, Paying 0.34% Each Month

Ever wondered why we always talk about an ideal TFSA stock? What is so different about a Tax-Free Savings Account (TFSA) that matching the right stock with its benefits could amplify returns?  A TFSA is not a normal savings account. It allows you to invest in stocks, bonds, and ETFs listed on public exchanges. Your investment grows tax-free, and you can even withdraw tax-free, without specifying a reason.

Suppose you take payouts from your TFSA in a particular year. You can reinvest those withdrawals in the following tax year without losing your TFSA contribution room. In a Registered Retirement Savings Plan (RRSP), your withdrawals are taxed unless they are under a specific plan, like a home purchase or higher education. You cannot reinvest the money withdrawn for any other reason, which means you will lose your RRSP contribution room forever.

Why monthly dividend stocks are an ideal TFSA pick

Let’s take a hypothetical situation. Amy has been building a passive income portfolio for a long time. By now, that portfolio is fetching her $100 a month. A sudden house repair created an expense shortfall beyond her emergency fund. She can access TFSA investments and take dividend payouts or sell some of her profitable shares and withdraw that amount. None of this amount will be added to her taxable income. In fact, her TFSA withdrawals this year will be added back to her TFSA contribution room on January 1, 2027.

In an RRSP, the same $100 would face a 10% withholding tax, and the remaining $90 would be added to Amy’s taxable income. Moreover, she would lose her RRSP contribution room. Thus, monthly dividend stocks are ideal for a TFSA.

An ideal TFSA stock for October

Granite REIT (GRT.UN) is an ideal TFSA stock for October, as the REIT dips to its seasonal low. Granite REIT has a portfolio of warehouses and storage facilities. Around 71% of its portfolio (by value) is e-commerce distribution centres spread across six countries in North America and Europe. Considering that the holiday season sale begins in November, manufacturers’ and e-commerce companies’ inventory starts falling, leading to lease renewals.

The REIT’s unit price has dipped 13% from its July 20 high of over $99, increasing the annual dividend yield to 4.2%. What’s unique about this REIT is that it grows its dividend every January at an average annual rate of 3%. Moreover, the REIT’s unit price hovers in the range of $65–$80. In some peak years, the unit price goes up to $100.

Most REITs’ unit prices are not volatile, but Granite REIT’s is because it actively buys and sells property to meet the changing storage demand. Even now, it has assets held for sale. You can use this volatility to accumulate units when the price dips.

You could also consider booking profit on one-off gains where the unit price touches $100. Otherwise, a $65 to $80 price is ideal to accumulate units.

This stock pays 0.34% per month

Granite REIT’s dividend is safe because it maintains a conservative debt profile. Its total debt is 37.3% of its property portfolio. Moreover, it has five times operating profit to cover interest costs. This shows Granite can comfortably absorb interest rate hikes without affecting profits.

As for dividends, here again its distributions are 65% of its adjusted funds from operations (AFFO), giving it sufficient financial flexibility to tackle inflation. It has grown its dividends annually for 15 consecutive years and can continue doing so.

As the 4.2% yield is paid in 12 monthly installments, you get 0.34% every month. So if you invest $10,000 today, you can buy 115 units and get $34 on November 16, 2026. This amount will likely increase by 3–4% in January 2027.

The TFSA will make these withdrawals tax-free. You can either take the payout or reinvest the dividend amount to buy Freehold Royalties, which pays a 6.2% annual dividend yield.