Picture a cheque landing in your account every quarter that is sheltered from Canada Revenue Agency (CRA) taxes.
Here’s how Canadian investors can use the Tax-Free Savings Account (TFSA) to generate $367 a month, or $4,400 annually.
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Why a TFSA suits tax-free dividend income
Any income earned from qualified investments in the TFSA, which includes dividends, interest, or capital gains, is not taxed by the CRA. The federal government’s tax expenditures state that TFSA income does not count when calculating income-tested benefits and credits.
The CRA confirms the 2026 TFSA limit is $7,000, the same as 2024 and 2025. Moreover, any unused room carries forward to subsequent years.
So, an individual who was 18 in 2009, has lived in Canada since, and never contributed has $109,000 of TFSA contribution room available in 2026.
Your number may be lower, so check the CRA My Account before you invest.
How much do you need in a TFSA to earn $347 a month?
A monthly dividend income of $367 translates to $1,100 a quarter and $4,400 a year.
The dividend income depends on the investment amount and dividend yield. For instance, a $100,000 investment in a dividend stock that offers you a yield of 5% will help you earn $5,000 in annual dividends.
At a 5.6% yield, you need roughly $75,000 to earn $350 in monthly dividends, and at a blended 4%, the investment required is closer to $105,000.
Canadian investors should consider owning a diversified mix of dividend-paying companies that pay an attractive yield in November 2026.
Enbridge: The high yield anchor for TFSA income
Enbridge (TSX: ENB) pays shareholders an annual dividend of $3.88. a year, which translates to a yield of 5.6%.
The company raised its payout by 3% for 2026, the 31st straight year of increases. CEO Greg Ebel leaned on that record during the second quarter call on July 31, stating:
Consistency remains a defining characteristic of our company, demonstrated by 31 consecutive years of dividend increases.
CFO Pat Murray emphasized that Enbridge returned $38 billion to shareholders over the past five years. It also expects to return $40 billion to $45 billion over the next five years. Notably, a $41 billion backlog of secured projects supports that plan.
Royal Bank: The dividend grower that balances the mix
Royal Bank of Canada (TSX: RY) pays shareholders an annual dividend of $7.04 and offers a yield of roughly 2.5%.
Royal Bank posted record fiscal third-quarter net income of $6 billion, up 11% from a year earlier, with diluted earnings per share of $4.23. Its CET1 capital ratio, a measure of financial liquidity, stands at 13.5%.
CEO David McKay spoke at Scotiabank’s financials summit on September 9. He said the bank generates “the most amount of capital of any bank in Canada by a wide margin.”
McKay was candid about one risk, given that trade friction is why the bank is holding extra capital.
What a $109,000 TFSA could pay each month
Let’s say you have the entire TFSA contribution room available in 2026. Here’s how you can split it evenly and earn more than $4,400 in annual dividends, which translates to a monthly payout of $367 or $1,100 each quarter.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Enbridge | $69.06 | 789 | $0.97 | $765 | Quarterly |
| Royal Bank of Canada | $283.93 | 192 | $1.76 | $338 | Quarterly |
The same approach works at a smaller size. An Enbridge-only TFSA needs about 1,134 shares, or roughly $78,250, to earn $4,200 in annual dividends.
The TFSA contribution room increases every year, which enables you to add to these positions consistently and raise the payout over time.
Dividends are not guaranteed, share prices move, and yields change with prices. So, treat these figures as illustrations and focus on creating a diversified portfolio of quality dividend stocks.
