A Tax-Free Savings Account (TFSA) paycheque gets much less mysterious once the capital has a number attached. The goal isn’t finding a stock with a dividend large enough to make the savings problem disappear. It’s building enough ownership that ordinary payments can cover something meaningful. For $6,000 annually, I’d start with a $150,000 target at a 4% yield, then leave room for the payments and prices to change.
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Work backwards
The calculation is $6,000 divided by 0.04, which equals $150,000. A 3% yield requires $200,000, while 5% requires $120,000. That range explains why chasing yield feels tempting. I’d favour the balance a group of businesses can support, with enough flexibility that a dividend cut doesn’t wreck the entire plan.
A TFSA balance this large can include years of contributions and investment growth. It doesn’t mean every Canadian can deposit $150,000 today. New deposits must fit personal room, including unused room carried forward. Growth inside the account doesn’t consume more room, and withdrawals generally restore room the next calendar year.
Three sources
Scotiabank (TSX: BNS) supplies banking income across Canada and international markets. Its latest quarterly dividend of $1.14 used half of adjusted earnings of $2.28 per share. That leaves profit for lending and financial protection, although weaker borrowers and uneven international returns can still pressure the payment.
Emera (TSX: EMA) supplies regulated utility income. Its first-half dividends used about 71% of adjusted earnings, leaving a cushion while infrastructure investment needs financing. I’d use it for starting income from essential services, with interest costs and customer-rate decisions limiting how quickly the dividend can grow.
CT REIT (TSX: CRT.UN) contributes monthly property income. Its second-quarter adjusted funds from operations (AFFO) payout ratio was 72.7%, meaning it kept part of its adjusted property cash earnings after distributions. Canadian Tire is its dominant tenant, so I’d keep the position beside other businesses instead of treating the monthly schedule as diversification.
What the target buys
Here’s a $50,000 budget for each holding at recent closing prices. Whole shares and units are rounded down, fees are excluded, and annual income assumes current payment rates continue.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| BNS | $131.17 | 381 | $4.56 | $1,737.36 | Quarterly | $49,975.77 |
| EMA | $70.08 | 713 | $2.96 | $2,110.48 | Quarterly | $49,967.04 |
| CRT.UN | $17.61 | 2,839 | $0.9816 | $2,786.76 | Monthly | $49,994.79 |
| TOTAL | 3,933 | n/ | $6,634.60 | $149,937.60 |
The example leaves $62.40 unspent and yields about 4.4% on the investment. Annual income exceeds the $6,000 target by $634.60. I’d keep that excess available for reinvestment or a cash buffer, rather than immediately expanding the spending budget.
Payments average $552.88 monthly, although only CT REIT pays every month. Collecting all distributions in cash and transferring $500 monthly can smooth the calendar. I’d also add more sectors over time, since three holdings aren’t a complete retirement portfolio.
Give growth time to help
Emera’s five-year total return through 2025 turned $100 into $160.68 with dividends reinvested. Its compound annual growth rate (CAGR) currently sits at about 10%. That component’s history doesn’t establish this portfolio’s return, but shows how growth and reinvested income work together.
I’d plan more cautiously. Starting with $25,000 and investing $500 at each month-end reaches approximately $154,279 in 12 years at an assumed 6% annual total return. That already includes reinvested dividends. At 4%, the same 12-year plan reaches about $131,822, pushing the target further away. The dividend yield shouldn’t be added again to either growth rate.
Bottom line
I’d aim for the capital first and build the TFSA income gradually. Inflation will raise the future spending target, so contributions need occasional increases too. A broader collection of dividend stocks, bought over years, gives the eventual $500 monthly withdrawal more support than one unusually large payout ever could.
