If you’re building a Tax-Free Savings Account (TFSA) in 2026, you already know the magic: every dollar of growth and every dividend you collect never sees the taxman. But to truly maximize that advantage, you need investments that pay reliably, grow their cash payouts over time, and let you sleep soundly through market storms. iShares Core MSCI Canadian Quality Dividend Index ETF (TSX:XDIV) is one exciting exchange-traded fund (ETF) that’s been doing this since 2017, and it’s pumping tax-free monthly cash into TFSAs consistently.

With a $4.4 billion portfolio holding just 21 of Canada’s most financially sound dividend stocks, XDIV ETF avoids trying to own everything. Instead, it focuses on businesses with solid balance sheets, low earnings volatility, and a track record of treating shareholders well. The result is a monthly‑paying ETF that feels almost custom‑built for a TFSA.

Here are three reasons this monthly dividend ETF is a top contender for your tax‑free account.

Quality over yield: XDIV ETF pays reliable dividends you can count on

iShares Core MSCI Canadian Quality Dividend Index ETF chases the safest among above-average yields. Its screening process prioritizes TSX dividend stocks with a track record of consistent payments, strong financials, sustainable dividend payout ratios, and less volatile earnings. These constituents are most likely to sustain dividend payments in the future. That means you’re less likely to face dividend cuts when the economy turns.

The dividend ETF also transforms the quarterly payouts it receives from portfolio companies into monthly payouts. Almost all its constituents currently make quarterly payouts, except for Whitecap Resources stock, which still pays high-yield monthly dividends. Other XDIV constituents, Keyera Corp and Pembina Pipeline stock, transitioned from monthly to quarterly payouts in 2023, while Tourmaline Oil “surprises” its stock investors with periodic special dividends. The XDIV ETF’s dividend frequency transformation into monthly payouts is a valuable service that smoothens TFSA portfolio cash flow and removes the need for investors to track quarterly payment dates from each individual dividend stock.  

With a distribution yield of 3.7% annually, paid monthly, you get a steady stream of cash you can actually rely on, making it ideal for reinvesting or supplementing your income — all tax‑free inside a TFSA.

A history of dividend growth that keeps your payouts rising

One of the most powerful growth and income forces in a TFSA is dividend growth. The XDIV’s underlying holdings aren’t just stable dividend payers — many are consistent annual dividend growers. By owning a concentrated list of high-quality Canadian businesses (43.9% financials, 30.7% energy, 12.1% utilities, and more), the ETF gives you exposure to companies that have raised their payouts year after year.

The ETF has made sure to pass on the growing dividends to investors. While the dividend growth hasn’t been as smooth as that of individual dividend stocks, XDIV ETF’s monthly payouts have increased substantially since 2017, and they may keep rising.

XDIV Dividend data by YCharts

Rising dividends inside a TFSA mean your tax‑free income stream grows without you lifting a finger.

Ultra-low fees let your TFSA compound faster

XDIV ETF’s management expense ratio (MER) of just 0.11% means investors incur only $1.10 per year for every $1,000 invested. Keeping expenses razor‑thin in a TFSA is a superpower, and the TSX dividend ETF’s low expenses let your capital grow without significant cost drag. Over time, that low fee leaves more money in your account to compound — and more monthly cash flowing into your pocket.

Investor takeaway

Your TFSA is one of the most valuable tools for building long‑term wealth. Anchoring it with a low-cost Canadian dividend ETF like the XDIV gets you a combination that’s hard to beat: monthly tax‑free distributions, a focus on dividend quality and reliability, and the potential for growing payouts over time. And with a five‑year total return of 134% (18.4% annualized), you aren’t sacrificing growth for income.

If you want your TFSA to pump out dependable cash month after month, while sleeping well at night, this TSX‑listed ETF deserves a spot at the core of your portfolio.

The post This TSX-Listed ETF Pumps Tax-Free Monthly Cash Into Your TFSA appeared first on The Motley Fool Canada.

More reading

• Power Up Your TFSA: This TSX-Listed ETF Delivers Tax-Free Monthly Cash Flow
• Opinion: The Best Place to Put Your $7,000 TFSA Contribution This Year

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Keyera, Pembina Pipeline, Tourmaline Oil, and Whitecap Resources. The Motley Fool has a disclosure policy.

If you want decades of passive income, it’s time to look at the iShares S&P/TSX Composite High Dividend Index ETF (TSX:XEI). Managed by the experts at BlackRock, the world’s largest fund manager, this $3.5 billion exchange traded fund (ETF) pays monthly dividends from a portfolio designed to be a “set-and-forget” cornerstone of your retirement.

We’ve all been there: staring at a spreadsheet of several different stocks, trying to remember which ones pay in January and which ones hike their dividends in June. It’s exhausting at times. Most investors believe they have to choose between a high-growth portfolio and a high-yield income stream. But what if you could have both — without the headache of tracking dozens of individual companies?

Since its inception in 2011, the XEI ETF offers instant diversification, reliable monthly distributions, and the potential for capital growth, making it one of the best dividend ETFs to buy and hold forever for decades of passive income.

The magic of the XEI ETF’s monthly distributions

The genius of the iShares S&P/TSX Composite High Dividend Index ETF lies in how it handles your cash flow. It holds a robust portfolio of 75 high-dividend-paying Canadian blue-chips. While these companies typically pay out quarterly, the dividend ETF converts that income into regular monthly distributions. This provides instant diversification and eases the pain of manually managing 75 different positions.

Best of all, the XEI ETF has a proven record of paying uninterrupted regular monthly dividends nonstop for at least a decade. Even better? Those dividends have increased by an average of 8.4% over the past five years, helping your purchasing power stay ahead of inflation.

A historical performance that defies the “income fund” label

Many income-focused funds can be yield traps that pay a high dividend while the stock (or unit) price slowly withers away. The XEI ETF flips that script. It retains strong capital gains potential and doesn’t employ risky leverage or expensive layers of derivatives, like the covered call strategies that often cap your upside.

The historical results speak loudly for themselves. The ETF has generated a total return of 228.9% over the past decade. It more than doubled over the past five years alone while dividends increased by 47%. Recently, the ETF has been on a tear, up 13.4% year to date.

XEI data by YCharts

This outperformance is largely thanks to its high exposure (now 31.4%) to the Canadian energy sector, which has run hot due to global oil supply constraints.

A proactive shield for your portfolio

Why should you buy an index fund instead of simply picking the top five yielders on the TSX? That’s because the XEI ETF is more proactive. The fund’s underlying index screens the TSX Composite Index every single month for potential additions and deletions. It’s ruthless: if a stock eliminates, suspends, or even omits a dividend, it is removed. This ensures that failing companies don’t drag down the income contributions to your ETF.

By investing in this monthly dividend ETF, you get broad exposure across 11 sectors of the Canadian economy, tilted towards the dividend heavyweights in the Financial sector, comprising 29.2% of the portfolio, followed by Energy at 31.4%, Utilities at 13.1%, and Communications stocks making up 8.5% of the portfolio.

The cost of dividend quality

Quality usually comes with a high price tag, but not here. With a management expense ratio (MER) of just 0.22%, you are only paying about $2.20 annually for every $1,000 you invest. For that small fee, you get a managed portfolio of 75 stocks that averages a P/E of 16.3 and sources its income from the most reliable blue-chip stocks in Canada.

Investor takeaway

While the recent market run has slightly reduced the ETF’s current yield from 4% to 3.7% annually, the total return potential remains formidable. Capital gains grow your overall portfolio, making you richer in retirement and extending the time your assets can fund your desired lifestyle.

If you’re looking for a “forever” asset that provides a respectable yield today and capital upside for tomorrow, the XEI ETF is the kind of asset you buy today and hold forever.

The post Want Decades of Passive Income? Buy This Index Fund and Hold it Forever appeared first on The Motley Fool Canada.

More reading

• 3 Canadian ETFs Worth Buying and Holding in Your TFSA Right Now
• How to Structure a $50,000 TFSA to Generate Consistent, Ongoing Income
• This Is the TFSA Balance You’ll Likely Need to Retire Comfortably in Canada
• Here Are My 2 Favourite ETFs to Buy for High-Yield Passive Income in 2026
• TFSA Balances at 30: Where Do Most Canadians Stand?

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stock market volatility may naturally increase investor anxiety. However, retirement planning looks far beyond current turbulence to secure an honourable living standard post-work. Therefore, contributions to your Tax-Free Savings Account (TFSA) for 2026 remain an important item on to-do lists this year.

But where could a Canadian put that $7,000 TFSA contribution for 2026? If your goal for 2026 is to build a passive income machine that pays you regardless of market turbulence, here is how I would personally allocate it, buying dividend stocks.

Buy TELUS stock for upfront yield

TELUS (TSX:T) stock is one of the best places to park part of your TFSA contribution for 2026 because the telecommunications giant is offering a juicy, and rare, 9.2% dividend yield supported by utility-like cash flow. Historically, a yield this high in the telco space signals distress, but for TELUS stock, the story today is more about a valuation disconnect than frightening operating turbulence.

While the Canadian telecommunications sector got pressured by high interest rates and regulatory noise, and tangled in a value-destructive price war, price battles are cooling off. Meanwhile, TELUS continues to aggressively expand its fibre-to-the-home, and 5G footprint, while building a new artificial intelligence (AI) related revenue stream. While the TELUS quarterly dividend won’t rise from current levels through 2028 as management focuses on growing free cash flow and fortifying the balance sheet, new investors lock in a massive, tax-free yield while waiting for valuations to reset.

TELUS, the only “Big Three” telecom stock with significant technology-related earnings and without a burdensome media segment, appears resilient enough to sustain its high yield dividend over the next three years.

The monthly income anchor

Dividend-paying exchange traded funds (ETFs) should add instant diversification to a TFSA built for passive income. Buying units in the iShares Core MSCI Canadian Quality Dividend ETF (TSX:XDIV) with a portion of your $7,000 TFSA contribution room offers exposure to a $4.4 billion portfolio of 21 professionally selected high-quality Canadian dividend stocks, earning you a monthly dividend stream that currently yields 3.7% annually.

Stockpicking is fun, but every passive income machine needs a steady flywheel. I would prefer the low-cost XDIV ETF over some of the more popular broad-market dividend ETFs because of its quality screen, which enabled it to average an 18.5% total annual return over the past five years, beating a broader market ETF by about 150 basis points. This comparison is made against the iShares Core S&P/TSX Capped Composite Index ETF.

Investors may incur very low management fees given a management expense ratio of 0.11%. The ETF’s monthly dividends provide that psychological win of seeing cash hit your account every 30 days, regardless of stock market gyrations.

A growth kicker: Buy EQB stock

If you wish to outperform Canada’s Big Six bank stocks, EQB Inc. (TSX:EQB), the parent to Equitable Bank, is a challenger bank stock that’s consistently outgrowing larger peers. EQB averaged a strong 19.8% annual revenue growth rate over the past three years and generated 105.7% in total returns during the period. Bay Street analysts project an 81% revenue surge for 2027 as EQB’s ongoing acquisition of PC Financial quadruples its customer base, nearly doubles its revenue run rate, and brings an incremental $1.5 billion in cheap customer deposits.

While EQB stock’s 2.1% dividend yield looks modest next to TELUS’, its dividend growth trajectory is marvelous, often clocking in at 15% to 20% annually.

By putting a portion of your $7,000 here, you add a massive yield on cost for your future self. It’s the dividend growth engine that may also drive the capital appreciation side of your TFSA.

The $7,000 TFSA allocation breakdown

A balanced $7,000 mini-TFSA portfolio would average close to $30 in tax-free monthly passive income (averaging out the quarterly payers), all while maintaining a strong tilt toward long-term growth.

The post Opinion: The Best Place to Put Your $7,000 TFSA Contribution This Year appeared first on The Motley Fool Canada.

More reading

• 4 TSX Stocks to Buy if the Economy Slows but Doesn’t Break
• How Splitting $30,000 Across Three TSX Stocks Could Generate $2,092 in Annual Dividends
• 2 Beaten-Down Dividend Titans Worth Considering Right Now
• How to Use Just $10,000 to Turn Your TFSA into a Money-Making Machine
• 10% Yield: Here’s the Dividend Trap to Avoid in April

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends EQB and TELUS. The Motley Fool has a disclosure policy.

If you have some cash sitting on the sidelines, market volatility in 2026 could provide better opportunities for building passive-income portfolios more affordably. With the right strategy, you can turn a $25,000 into a cash-pumping machine that pays you month after month, regardless of what the TSX does next. Using the stability of monthly dividend exchange-traded funds (ETFs), shielding your profits in a Tax-Free Savings Account (TFSA), and letting the power of compounding run wild could be your ticket to making a substantial passive-income stream that pays bills and finances your retirement cravings.

How to make monthly passive income

When building a portfolio designed to make passive income, the biggest mistake investors make is trying to buy 20 different stocks with a small account. With $25,000, trading fees and a lack of diversification may kill your returns. To build a robust passive-income stream, concentrate your cash into assets that offer instant diversification and reliable payouts.

Specifically, you need dividend ETFs (exchange-traded funds). Unlike single companies that usually pay quarterly, a monthly-dividend ETF aggregates those paychecks and spreads them out. This gives you 12 paydays a year instead of just four. For retirees or those covering monthly bills, this frequency is a game-changer. It also accelerates compounding — reinvesting dividends 12 times a year rather than four can significantly balloon your portfolio value over the long term.

First step: The TFSA shield

Before discussing what to buy, let’s discuss where to hold it. The cumulative TFSA contribution room is substantial in 2026. If you invest $25,000 in a TFSA, every single dividend payment, every dollar of that passive income, is yours to keep — forever. No taxes. None. You eliminate tax drag on your portfolio’s growth potential.

Set up a DRIP

To make passive income work better for you, turn on the dividend-reinvestment plan (DRIP). This automatically uses your monthly dividends to buy more shares. Even if you are relying on this income later in retirement, for now, reinvesting that $100 or so a month back into the fund is how you turn $25,000 into $50,000 or more over the next decade.

The core holding: iShares Core MSCI Canadian Quality Dividend Index ETF

So, where do you park the cash? Look no further than iShares Core MSCI Canadian Quality Dividend Index ETF (TSX:XDIV). Managed by BlackRock, the largest ETF issuer globally, the XDIV ETF is a gold standard for conservative investors who want to make growing passive income without losing sleep.

What makes XDIV special is its “quality” mandate. This ETF screens for steady dividend-paying companies with strong balance sheets and low earnings volatility. In plain English, the manager kicks out the risky dividend stocks that might cut their dividends during a downturn. Owning a quality-focused fund like the XDIV means you own the companies that survive and thrive during periods of market turmoil, and keep earning monthly income.

The XDIV’s $4.3 billion portfolio holds 21 high-quality Canadian stocks and pays distributions monthly. Currently, the monthly payout implies a yield of roughly 3.7%, but the magic is in the growth. The ETF has increased its annualized total payouts from $1 in 2018 to $2.11 in 2025.

If you had invested $25,000 in the XDIV ETF five years ago, capital gains alone would have turned that into over $44,000. However, if you had reinvested your monthly dividends along the way (the DRIP effect), you could be sitting on nearly $55,000 today.

XDIV data by YCharts

That initial $25,000 investment could be on track to generate approximately $1,650 in annual dividends for 2026 — an implied yield of 6.6% on cost.

Including the dividends on shares bought with reinvested dividends, the passive-income stream grows substantially. Actual returns may differ in the future, but the ETF’s proven income growth strategy remains intact.

With a management expense ratio of just 0.11%, expect to pay roughly $1.10 per year for every $1,000 invested. That leaves more net passive income in your TFSA to compound your total returns.

The Foolish bottom line

Market volatility is your opportunity as high-quality assets go on sale for a limited time. By parking your $25,000 in a monthly dividend ETF, sheltering it in a TFSA, and turning on the DRIP, you would be building a machine that makes passive income for you, automatically, month after month.

The post Build a Passive-Income Portfolio With Just $25,000 appeared first on The Motley Fool Canada.

More reading

• Power Up Your TFSA: This TSX-Listed ETF Delivers Tax-Free Monthly Cash Flow
• This TSX-Listed ETF Pumps Tax-Free Monthly Cash Into Your TFSA
• Opinion: The Best Place to Put Your $7,000 TFSA Contribution This Year

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

With the 2026 tax-free savings account (TFSA) contribution limit at $7,000, the total cumulative room rises to a substantial $109,000 for those eligible since 2009. However, there is a massive maximizer gap in Canada. Despite the growing room, many eligible residents aren’t using up all the tax-efficiency edge the TFSA brings to individual retirement planning.

According to the BMO Investment Survey (2025), the average boomer’s TFSA balance was just above $72,000 going into 2025. These individuals were well into their rewarding careers when the TFSA went live in 2009.

The latest CRA Statistics (2025 Report) reveal that the average unused contribution room per individual stands at $49,596. The vast majority of Canadians are leaving their most powerful tax-free tool underutilized. If you find yourself with $20,000 in dry powder, you could be ahead of the curve. And now it’s time to invest it like a professional as you work on maximizing all the benefits the TFSA brings to the financial planning table.

Here’s how I’d deploy $20,000 in TFSA investments for 2026, starting with an exchange traded fund (ETF) as a core holding for instant diversification.

The core holding: Vanguard FTSE Canada All Cap Index ETF (VCN)

Every resilient retirement investment portfolio needs a solid foundation. The Vanguard FTSE Canada All Cap Index ETF (TSX:VCN) is a gold standard for low-cost, broad-market exposure. It offers access to returns on a $13.2 billion portfolio of 205 small-cap, mid-cap, and large-cap stocks listed in Canada.

If small caps successfully maximize on growth opportunities in the evolving and rebalancing Canadian economy, investors will participate in the above-average growth. If mid-caps capitalize on their advanced learning curves to offer superior returns, the VCN ETF investor gets a share. If Canadian large caps outperform the market as they capitalize on established moats, the ETF will still pass on the gains to investors. It captures returns from “all” market players.

The VCN ETF’s wide diversification comes at a low cost, given a management expense ratio (MER) of just 0.06%. Investors may expect to pay about $0.60 annually on every $1,000 invested. You get to keep most of the returns yourself, instead of sharing them with the fund manager.

Most noteworthy, the ETF has generated about 233% in returns during the past decade. A 2.3% dividend yield should offset ETF costs.

I would allocate about half the TFSA balance here, and forget about it for a long time as returns compound over time, tax-free forever.

Buy Dollarama stock for defensive growth

The remaining half of the $20,000 TFSA balance could be split over a number of defensive stocks and dividend plays on the TSX – just in case the market worries itself into a (usually short-lived) recession while Canada recalibrates its trade-partners book.

Dollarama (TSX:DOL) stock could be a good candidate for a defensive TFSA stock to buy and hold in 2026. The retailer is a master at generating good returns on invested capital (ROIC). Dollarama’s operations generate above-average operating margins, and its ROIC at 23% towers above an industry average of 16%, earning the stock better valuation multiples, especially during tough economic times.

Moreover, with operations straddling South America and Australia, the defensive stock should do well, even if Canada goes through some economic turbulence. Even if the Canadian economy weakens, value-seeking consumers may sustain its sales growth trajectory.

With a low beta under 0.2, the low volatility defensive stock acts as a TFSA shock absorber in 2026 and beyond. Investors are paying a premium forward P/E of 35 for a business that consistently outcompetes its peers.

The post How I’d Invest $20,000 of TFSA Cash in 2026 appeared first on The Motley Fool Canada.

More reading

• Interest Rates Aren’t Falling: Here’s What I’d Do With My TFSA
• This Canadian Stock Is 16% Off Its Highs and Built to Hold Forever
• 1 TSX Dividend Stock I’d Feel Comfortable Holding for a Full Decade
• 3 Stocks That Canadian Investors Can Feel Good About Buying in Any Market
• 5 Great Canadian Stocks to Buy Right Away With $5,000

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Dollarama. The Motley Fool has a disclosure policy.

Crafting a lifelong investment portfolio requires choosing assets you can trust through decades of market cycles. The ultimate goal is establish a simple, durable investment foundation for retirement. This often means building a core portfolio with low-cost, strategically sound exchange-traded funds (ETFs) that you can buy and confidently hold forever.

Here are three best-in-class Canadian ETFs I’d personally buy and hold forever. Each serves a distinct and essential portfolio role, and you may consider them for the core of your forever portfolio.

iShares Core S&P/TSX Capped Composite ETF: Your Canadian foundation

For investors who want to own the broad Canadian market with zero fuss, the iShares Core S&P/TSX Capped Composite ETF (TSX:XIC) is the definitive choice. It is designed to do one job perfectly: passively track the S&P/TSX Capped Composite Index at an exceptionally low cost.

With a management expense ratio (MER) of just 0.06%, you pay only $0.60 annually for every $1,000 invested. This cost efficiency is crucial for long-term compounding by reducing cost drag on returns. The ETF holds over 200 stocks in its $23.9 billion portfolio, providing instant diversification across the Canadian economy. Over the past decade, it has delivered average annual returns of 12.6%, virtually matching its benchmark net of fees.

The takeaway is that with the XIC ETF, you will never significantly underperform the Canadian market. You get a low-cost, set-and-forget foundation.

Take note that the Canadian market is heavily weighted toward financials (31.4%), materials, and energy stocks. This introduces sector concentration, but for a core Canadian equity holding, accepting this market-weighted exposure is part of the “market returns” strategy.

Sleep easy knowing your portfolio will reliably capture Canada’s stock market returns.

BMO Canadian High Dividend Covered Call ETF: Your monthly income-producing investment

If your forever strategy prioritizes generating steady passive income, the BMO Canadian High Dividend Covered Call ETF (TSX:ZWC) is a powerful tool. It enhances a portfolio of high-quality Canadian dividend stocks by writing (selling) covered call options on the 90 curated holdings in its $2 billion portfolio. This strategy boosts cash flow, and the ETF converts traditional quarterly dividends into consistent, high-yield monthly distributions.

The result is a formidable annualized yield of roughly 6%, paid monthly. This makes the ZWC ETF highly attractive for passive income-focused investors, especially within tax-advantaged accounts like TFSAs or RRSPs. The dividend ETF’s strategy has proven successful, delivering an average annual return of 12.4% over the past five years, turning a $10,000 investment into approximately $18,000.

The trade-off for high income is the capped upside during strong bull markets, as the call options limit gains on the underlying stocks beyond certain points. For a forever portfolio, however, the ZWC ETF is the high-octane income generating engine that can provide reliable cash flow for decades.

BMO S&P 500 Index ETF (TSX:ZSP): Your global growth anchor

A forever portfolio confined only to Canada misses immense growth and diversification opportunities. The BMO S&P 500 Index ETF (TSX:ZSP) provides essential, low-cost exposure to the 500 largest and most influential companies in the United States.

Holding the ZSP gives you direct access to the world’s leading innovators across technology, healthcare, and consumer sectors. While the TSX has minimal healthcare and technology exposure, the S&P 500 dedicates over 9% to healthcare and 34.3% to information technology sector leaders, including Nvidia, Microsoft, and Alphabet (Google). With an MER of 0.09%, this diversification is a bargain at a cost of $0.90 annually on every $1,000 invested.

The S&P 500 Index ETF’s historical performance speaks for itself. The ZSP ETF has delivered average annual returns of 15.8% over the past five years, growing a $10,000 investment to more than $20,800. Since its inception in 2012, that same investment could have grown to more than $82,000.

ZSP Total Return Price data by YCharts

Canadian investors holding the unhedged version of the S&P 500 ETF also gain natural currency diversification, often benefiting from long-term exchange rate trends.

The post 3 ETFs I’d Buy Now and Plan to Hold Forever appeared first on The Motley Fool Canada.

More reading

• How to Build a Meaningful Passive Income Portfolio Starting With Just $25,000
• Maximizing Returns: How to Best Use Your TFSA in 2026
• How to Structure a $50,000 TFSA to Generate Consistent, Ongoing Income
• Just Starting Out? 2 Simple ETFs That Any Canadian Investor Can Use
• 3 Canadian ETFs Soaring Upwards to Buy Now for a TFSA

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Alphabet, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

This January, Canadian investors could power up their Tax-Free Savings Accounts (TFSAs) for juicy passive income, paid every month for a cash-rich 2026. If your goal for the new year is to secure outrageously high passive income, you might want to look beyond standard individual dividend stocks into monthly-dividend paying exchange traded funds (ETFs) primed for high payout yields

The Harvest Healthcare Leaders Income ETF (TSX:HHL) is currently offering a compelling proposition: the stability of the global healthcare sector combined with a mouth-watering 9.2% annual yield.

The passive income engine: How the HHL ETF yields 9.2%

At first glance, a yield nearing double digits might seem too good to be true, especially in a sector as stable as healthcare. Typically, a portfolio of healthcare stocks would offer a modest dividend yield of around 1.8%.

However, the HHL ETF is an actively managed fund that employs a “covered call” strategy to supercharge its income. By writing options on its portfolio positions, the fund managers generate additional cash flow to augment the portfolio’s natural dividends. This strategy allows the fund to transform that standard 1.8% yield into a juicy 9.2% annualized distribution.

For income-focused investors, the payout structure is ideal: the ETF pays a monthly distribution of $0.06 per unit. This consistent monthly cash flow makes it a strong contender for those using their TFSA for passive income.

What you are buying

When you buy HHL ETF, you get more than its monthly dividend’s juicy yield; you are buying into a $1.8 billion portfolio of the 20 largest healthcare companies in the United States. This includes giants in big pharma, biotech, life sciences, and healthcare equipment.

This exposure is particularly valuable for Canadian investors because the healthcare sector is significantly underrepresented on the TSX. Some of the large-cap “healthcare” stocks in the S&P/TSX Composite Index are actually retirement residence operators, which arguably belong in the real estate sector. The HHL ETF allows you to diversify into true global healthcare multinationals that are inflation-resistant and benefit from rising global healthcare expenditure.

The cost of owning the monthly dividend ETF is manageable. With a management expense ratio (MER) of 0.98%, investors may incur about $9.80 per year in management expenses on every $1,000 invested. Replicating the ETF’s strategy on your own could cost significantly more, before we consider investments in the required skillset.

Powering up your TFSA: The power of dividend reinvestment

The primary investment thesis for the high-yield HHL ETF is the dividend. In fact, the dividend is arguably the most important part of owning this monthly dividend ETF.

Data shows that since the fund’s inception in 2016, a $10,000 investment could have grown into a $23,400 position today. However, this growth is largely driven by dividend reinvestment. Without reinvesting those monthly payouts, the capital value alone might have stagnated at around $9,700 over the same period.

HHL data by YCharts

As of December 31, 2025, the ETF boasted a five-year average annual return of 9%. This creates a clear path for wealth creation: use the high yield to reinvest and grow your capital position whenever you can.

The Foolish bottom line

Generating a 9.2% yield in an individual portfolio is incredibly challenging, especially within the contribution limits of a TFSA. With a management fee of 0.85% and a Management Expense Ratio (MER) of 0.98%, the HHL ETF provides a professionally managed, diversified solution to that problem.

If you are looking to boost your income in 2026, adding the largest Canadian healthcare-focused ETF to your watchlist today is a smart move.

The post Power-Up Your TFSA: This TSX-Listed ETF Delivers Monthly Tax-Free Cash Flow appeared first on The Motley Fool Canada.

More reading

• Here’s My Highest Conviction Canadian Stock to Buy Right Now
• The Canadian Stock I’d Want in My Corner When Volatility Strikes
• 4 TSX Stocks to Buy if the Economy Slows but Doesn’t Break
• This Canadian Stock Down 50% Is Nearly Perfect for Long-Term Investors
• Opinion: This Is the Only TSX Growth Stock to Own for the Next 3 Years

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

If you are turning 40 and your retirement savings feel nonexistent, you are not alone, and you are certainly not out of time.

The narrative that “it’s too late” is dangerous because it leads to inaction. The reality? Your 40s are often your peak earning years. And you have a 20- to 25-year runway before reaching the traditional retirement age. That’s a lifetime in the stock market.

Whether you’re someone who prioritized paying down debt or you are a newcomer to Canada starting fresh, 2026 is your year to pivot. Here is how to take a $10,000 seed and grow it into a respectable nest egg using a simple “Core and Satellite” investment strategy.

A retirement plan reality check for a 40-year-old

The median Registered Retirement Savings Plan (RRSP) balance for Canadians aged 35-44 was around the $33,000 mark by 2023, though averages (skewed by the wealthy) can look higher.

If you have $10,000 ready to deploy, you are already within striking distance of your peers. The difference is that you are about to implement a strategy that many of them may be lacking.

The strategy: Core and explore

To catch up on your retirement portfolio objectives, you can’t afford to be reckless, but you also can’t be passive. A Core and Satellite retirement plan investment approach strikes this balance. You devote a majority of your money into a reliable “core” made up of cheap index exchange-traded funds (ETFs), and the remainder into high-growth “Satellite” single high-conviction stocks.

Setting up your core portfolio

Your core portfolio is your foundation, and should ideally track the broad market for ultimate diversification. This is your safety net.

iShares S&P/TSX 60 Index ETF (TSX:XIU) is a staple. It gives you low-cost exposure to the 60 largest blue-chip stocks in Canada, including your chartered banks, energy giants, railway stocks, and cash flow secure utilities. XIU ETF offers wealth stability, steady capital gains, and current income. Currently, it yields a dividend of roughly 2.6%.

Over the past decade, XIU has delivered an annualized total return of approximately 12.4%. Even if it reverts to a more conservative 9% historic average, it remains a powerful wealth compounding engine.

Choosing the satellites: Your retirement plan’s growth boosters

This is where you take calculated risks to potentially accelerate your returns. These are individual stocks that you believe will significantly outperform the broader market.

For example, Hammond Power Solutions (TSX:HPS.A) is one electrification stock that could have been a classic satellite pick over the past half-decade as it entered a double-digit revenue and earnings growth spree when global demand for grid expansion and modernization equipment soared.  Investors who picked Hammond Power Solutions stock five years ago could be sitting on more than 1,700% in total returns on investment today. A $10,000 investment in the growth stock could be worth $180,000 today, with dividends reinvested.

HPS.A Total Return Price data by YCharts

Past performance isn’t indicative of future returns. However, Hammond Power stock enters 2026 with positive momentum after data centre-related order wins during the fourth quarter increased its backlog by 53%, amplifying its revenue growth potential.

That said, your satellite stock picks require deep research. Joining an investment forum managed by professional stock pickers may help uncover growth stocks that may propel your retirement plan’s growth.

How a $10,000 initial investment could grow in a retirement plan

Suppose you invest your $10,000 today into a balanced portfolio that averages a conservative 9% annual return.

Without any further plan contributions, your $10,000 initial investment may grow to about $86,000 in 25 years (at age 65). That’s not bad, but its not enough a retirement fund.

To create a sizeable retirement plan portfolio, you should commit to regular capital contributions to the plan. Adding $500 a month to the retirement plan, earning 9% annual returns, could build a $625,000 retirement portfolio in 25 years. Fired-up individual stock picks (the satellites) could propel this retirement plan’s growth towards a million and beyond.

The Foolish bottom line

At 40, you possibly have the income to save and the wisdom to stay the course on a retirement plan. Use your Tax-Free Savings Account and Registered Retirement Savings Plan contribution room to optimize tax efficiency, and consider joining reputable investment communities to sharpen your stock-picking skills for those “satellite” positions.

The year 2026 could be the beginning of your retirement plan’s compound growth story. Make it count.

The post Kickstart Your Retirement at Age 40 With $10,000 to Begin appeared first on The Motley Fool Canada.

More reading

• 3 Canadian Stocks That Look Expensive (But I’d Buy Them Anyway)
• TFSA Investors Take Note — The CRA Is Actively Watching for These Red Flags
• 2 Growth Stocks That Could Keep Climbing Through 2026 and Beyond
• 3 Canadian ETFs Worth Tucking Into a TFSA and Holding for the Long Haul
• As Earnings Season Winds Down, These 3 Canadian Stocks Proved They Could Sit Through the Noise

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Hammond Power Solutions. The Motley Fool has a disclosure policy.

Building a $1 million retirement portfolio does not require a complex web of hedge fund strategies or day-trading skills. In fact, for most Canadian investors, complexity can be the enemy of returns. The most effective path to wealth is often the simplest: a Core and Satellite portfolio-building approach that thrives on Exchange Traded Funds (ETFs) and selectively buys high-conviction individual stocks to boost returns.

Think of your portfolio like a solar system. The “Core” is your sun, a massive, and stable forever asset burning bright for decades. This is where the majority of your money lives, compounding quietly in broad market index funds. The “Satellites” are the smaller, high-conviction planets orbiting that sun, the individual stocks you pick to boost your total returns.

If you want to build a forever portfolio for 2026 and beyond, you may only need two ETFs to form that unshakable core.

The Vanguard S&P 500 Index ETF: A growth engine for retirement accounts

If you want to retire a millionaire, you need growth, and more of it. Historically, there has been no greater wealth-generating machine with better consistency than the American economy.

The Vanguard S&P 500 Index ETF (TSX:VFV) is the most popular way for Canadians to tap into this growth engine, using Canadian dollars. By purchasing a single unit of the VFV ETF, you instantly own a slice of the 500 largest companies in the United States. The global dominators like Apple, Microsoft, Amazon, and the AI-giant Nvidia comprise a significant portion of the ETF’s $27.8 billion portfolio.

Since its inception in 2012, the S&P 500 ETF has averaged a 17.4% compound annual return over 13 years. Over the past decade, a $10,000 investment in the fund could have grown to $39,000, with dividend reinvestment.

Most noteworthy, the ETF is a low-cost investment fund with a Management Expense Ratio (MER) of just 0.09%. Investors pay about 90 cents a year in annual fees on every $1,000 they invest.

The VFV ETF could be your portfolio’s growth anchor. It captures the upside of the world’s most innovative tech companies without forcing you to pick a single winner in a crowded field. Technology stocks comprise 36% of the ETF’s portfolio.

The iShares S&P/TSX 60 Index ETF

While the U.S. offers tech-fueled growth, Canada offers stability, dividends, and banking “monopolies”. This is where the iShares S&P/TSX 60 Index ETF (TSX:XIU) shines as your Canadian domestic stocks foundation.

Launched in 1999, the XIU is one of the oldest and largest ETFs in Canada. It tracks the 60 largest companies on the Toronto Stock Exchange. Unlike the tech-heavy U.S. market, the XIU is dominated by Canadian financial sector stocks, which command 38% of its $19.2 billion portfolio, with energy and materials stocks contributing 156% and 14% weights.

The ETF carries a reasonable MER of 0.18%; investors may incur about $1.80 in costs per every $1,000 invested. The fund makes quarterly dividend payouts, currently yielding 2.6% annually. These are eligible dividends favourably taxed in non-registered accounts.

It may appear boring to growth-oriented investors due to its lower 10.6% exposure to technology stocks compared to the S&P 500’s 36%, but the XIU has generated a strong 12.1% in compound annual returns over the past decade, tripling a $10,000 investment to more than $33,000.

The XIU ETF could be your portfolio’s defensive line. It provides steady quarterly cash flow and lower volatility that keeps you sleeping soundly when the tech sector takes breathers.

Why the 2 easy ETFs work

Together, the VFV and XIU ETFs cover almost every base. While the VFV gives you exposure to American technology and consumer growth, the XIU provides dividend heavyweights from Canadian financials, energy, and utilities to boost portfolio income. Canadians get the best of both worlds: high growth potential from the south and tax-efficient income from home.

For a balanced retirement strategy, a 50/50 or 60/40 split between these two can serve as your entire core. You can set up automatic contributions, reinvest the dividends, and simply wait.

Add “satellite” boosters to supercharge returns

Once your core portfolio is set, the real fun begins. You may leave 10% to 30% of your portfolio for the “satellites,” which are your high-conviction single stocks that have the potential to outperform broad market indexes.

You can use your knowledge to hunt for multi-baggers, or join an investment group led by professionals that help you stay the course towards your $1 million target.

Keep adding new capital regularly.

The post Want a $1 Million Retirement? 2 Easy ETFs to Buy and Hold Forever appeared first on The Motley Fool Canada.

More reading

• TFSA Investors Take Note — The CRA Is Actively Watching for These Red Flags
• Just Starting Out? 2 Simple ETFs That Any Canadian Investor Can Use
• 3 Canadian ETFs Worth Tucking Into a TFSA and Holding for the Long Haul
• What Does the Average Canadian’s TFSA Look Like at 55?
• This “Set-it-and-Forget-it” ETF Could Make You a Multi-Millionaire With Almost No Effort

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Amazon, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

Every portfolio needs a mix of different asset classes such as stocks, gold, bonds, and ETFs. Each asset class has a different return offering. For instance, gold plays a role as a hedge during economic uncertainty. Gold outperformed the stock market, rising 54%, whereas the TSX Composite Index rose 22% in 2025. Even the tech sector underperformed, with a few stocks being the outliers. Identifying and benefiting from outliers requires investment in individual stocks. Sometimes you gain, sometimes you lose.

Investing in an ETF

However, ETFs give you a balanced return on the overall market. Investing in an ETF gives you a share of the diversified portfolio that follows the market trend. Now, if you are looking to outperform the market, you need an eye for growth stocks. While you can dedicate a portion of the portfolio to such stocks, your portfolio should at least give market-linked returns.

ETFs can help in getting market performance, sector performance, and even commodity performance. Now, which ETF to invest in depends on your view of the market in 2026.

What trends could shape up in 2026 

The market has been volatile in 2025 because of the trade war. The 2025 rate cuts and reduction in federal income tax rate to 14% from 15% in 2026 are expected to improve market liquidity in 2026. However, the Canadian government’s attempt to diversify its trade partners could see a correction or slowdown in the market. Add to it the concerns around the artificial intelligence (AI) bubble burst.

The market ETF to invest in 2026

All these factors favour a conservative investing approach. At times like these, the market index is best positioned to benefit from the shift in supply chain dynamics.

The BMO S&P/TSX 60 Index ETF (TSX:ZIU) replicates the TSX 60 Index, giving you exposure to the current trends and market leaders with stable fundamentals. A well-diversified portfolio with exposure to the finance, energy, materials, and technology sectors provides your money with exposure to the Canadian economy’s strength. Since the ETF follows the TSX 60 Index, the risk of human bias is low, and the management fee remains minimal at 0.15%.

If one sector collapses, another rises and gives you a balanced return greater than the term deposit. Among ZIU’s top five holdings are the Royal Bank of Canada, Shopify, and Enbridge, all market leaders in their respective industries. They have thrived through the worst of the crisis and delivered long-term growth to their shareholders.

However, the problem with this ETF is that it will fall if the market crashes. Monetizing every situation, you can double down on your investments in such a scenario, as the recovery is assured. Remember, this ETF only follows the market, as the TSX 60 index recovers.

The sector ETF to buy in 2026

The market ETF can secure your position in the next growth phase of Canada, post the tariff war. However, you can also consider investing in sector performers to outperform the market by a slight margin while keeping your risk lower than that of individual stocks.

The iShares S&P/TSX Capped Information Tech IDX ETF (TSX:XIT) gives you exposure to changing tech trends from Bitcoin mining to AI to e-commerce. The ETF has delivered an average annual return of 14.5% in five years and 20% in 10 years as the above trends have taken shape. The ETF could see a sharp correction in early 2026 as Celestica and Shopify, two of its largest holdings, report seasonal weakness. That could be a good entry point.

The next growth driver for this ETF could be Constellation Software and Descartes Systems, which have corrected significantly in 2025. Their recovery could drive the ETF returns in 2026. The return on investment in tech software and the recovery of the auto sector could drive the share price of BlackBerry.

Investor takeaway

Investing is a habit, and allocating 5% to 10% of your portfolio in ETFs is a great way to balance your investments. When markets are uncertain, ETFs provide certainty. While they tend to provide better returns in the long term, commodity ETFs can give short-term gains from opportunistic investments.

The post Here Are My 2 Favourite ETFs for 2026  appeared first on The Motley Fool Canada.

More reading

• 3 Canadian ETFs Worth Buying and Holding in Your TFSA Right Now
• 3 Canadian ETFs I’d Hold in a TFSA and Never Sell

The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Celestica, Constellation Software, Descartes Systems Group, and Enbridge. The Motley Fool has a disclosure policy. Fool contributor Puja Tayal has no position in any of the stocks mentioned.