What would an extra $200 a month do for your budget? For investors with a $50,000 TFSA, building consistent monthly income can help cover recurring bills or provide some additional cash each month.
The key is choosing the right investments and the right allocations. Fortunately, there’s no shortage of those on the market.
Here’s one allocation I’d consider, assuming the money is already inside the TFSA waiting to be invested.
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Start with Scotiabank as the dividend foundation
The first investment I’d consider is Bank of Nova Scotia (TSX: BNS). Scotiabank is one of Canada’s largest bank stocks, with a global operation that includes Canada and multiple markets abroad.
Scotiabank’s lending and deposit businesses provide a recurring source of revenue. The bank’s wealth management and capital markets arms add other earnings streams.
That supports a dividend record that is among the longest in Canada. The bank has paid dividends continuously since 1833. That’s an incredible amount of time that spans wars, booms and busts.
This makes it an ideal candidate to generate consistent monthly income. As of the time of writing, Scotiabank offers a 3.5% yield. For this portfolio, I’d look to allocate $20,000 toward Scotiabank, resulting in just under $700 each year.
Add monthly real estate income from RioCan
The next investment to generate consistent monthly income I would consider is one of Canada’s larger REITs. Specifically, RioCan Real Estate Investment Trust (TSX: REI.UN).
RioCan owns a portfolio of predominantly essential retail properties. The REIT’s tenants pay rent, which in turn provides the cash flow needed to support monthly distributions.
That portfolio provides investors with exposure to physical real estate without the responsibilities of owning a rental property directly.
In the most recent quarter, RioCan reported retail committed occupancy of 98.9%. Core funds from operations per unit saw an increase of 5.1% from the prior-year period.
In other words, the REIT is making money and is near fully occupied.
As of the time of writing, RioCan offers a yield of 5.5%, which means that our $15,000 allocation would generate just under $820 each year, or a little over $68 each month.
Add some ETF income
Rounding out the trio of investments is the BMO Canadian High Dividend Covered Call ETF (TSX: ZWC) for our last $15,000.
ZWC holds a portfolio of Canadian dividend-paying stocks and writes covered calls to collect option premiums. Those premiums help support its monthly distribution, albeit with a limited upside when its components rise.
For income, ZWC offers a yield of 6%. That payout can change, but right now, given the final $15,000 in our portfolio, that works out to just under $75 every month.
Turn the payments into consistent monthly income
Here’s how the full allocation comes together.
| Investment | Current Price | Amount Invested | Number of Shares | Dividend | Estimated Annual Income |
| Scotiabank | $132.66 | $20,000 | 150 | $4.56 | $684 |
| RioCan | $21.23 | $15,000 | 706 | $1.16 | $818.96 |
| ZWC | $22.98 | $15,000 | 652 | $1.37 | $893.24 |
| Total | $50,000 | $2,396.20 |
That works out to approximately $200 every month. RioCan and ZWC pay monthly, while Scotiabank pays dividends quarterly.
Note that investors who aren’t ready to, or cannot reach that $200 per month level yet can choose to reinvest those dividends, allowing them to compound until needed.
Buy them, hold them and watch your consistent monthly income grow.
