Motley Fool Canada Chief Investment Officer Iain Butler calls SmartCentres REIT (TSX: SRU.UN) a “perfect” stock to buy and hold in a TFSA for years to come. Hear him explain why in less than five minutes.

Prefer to read? There’s a transcript below.

Nick Sciple: I’m Motley Fool Canada Senior Analyst Nick Sciple, and this is The Five-Minute Major, here to make you a smarter investor in about five minutes. Today, we’re discussing what could be one of the best TFSA stock options for your monthly passive income. The company is SmartCentres REIT, Walmart’s landlord throughout Canada. My guest today is Motley Fool Canada Chief Investment Officer Iain Butler. Iain, thanks for joining me.

Iain Butler: Always a pleasure to be here.

Nick: If you were looking to add reliable monthly income to your TFSA right now, and lots of people are, why does SmartCentres REIT stand out to you as a strong contender to have on your radar?

SmartCentres REIT is a ‘perfect, perfect, perfect’ idea for TFSA investors

Iain: That’s right, and rightfully so. It’s a tremendous tool that we Canadian investors have, the TFSA, and this is a perfect, perfect, perfect idea to just stick in there and leave it alone for years. So SmartCentres is anchored by necessity-based retail operations, and these operations provide tremendous stability in most, in almost all, economic environments outside a pandemic, which hopefully we don’t see again. Even then, this is a company that’s skated by relatively unscathed. So, strong results have been posted recently. They’ve got an industry-leading 98.6% occupancy rate.

And the dividend yield is currently about 6.7%, and that is a dividend that is paid monthly.

The tenant base, as indicated, is super resilient, anchored by big-name brands that perform well, regardless of the economic backdrop. These are brands that people go to every day, day in and day out.

The big name behind this company is Walmart. SmartCentres was actually born to be Walmart’s landlord, essentially, when Walmart came to Canada so many years ago. Walmart continues to be the anchor tenant for this company, and to SmartCentre’s benefit. They’ve got a very unique relationship there.

Growth potential for SRU.UN and its dividend

Beyond retail, this is a REIT that has been expanding elsewhere. They’ve recently opened three new self-storage facilities, bringing their total up to 14, and they’ve got some residential development going on. They own a big swath of land at the north end of Toronto, the city Vaughan. They’ve got a condo tower, which is already 93% pre-sold. This property is right adjacent to a newly constructed public transit hub. There’s a new subway stop there. This is sort of the next leg in SmartCentre’s evolution, this development of sort of mixed-use property.

Nick: You talked about SmartCentre’s strong history of dividend payments, really great numbers when you look at what you’re looking for from a REIT, great tenants. If you look to the future of those tenants looking to spend more in Canada, Walmart recently announced a $6.5 billion expansion. What does that mean for SmartCentre’s unit holders?

Iain: This is a story anchored by Walmart. Walmart accounts for about 23% of rental revenue for SmartCentre. And Walmart is building dozens of new stores, starting with five supercenters by 2027.

This is just gonna drive major anchor tenant demand and foot traffic to these properties.

The Walmart strategy builds on a previous $3.5 billion modernization investment, and it just shows that Walmart’s gonna keep growing, and they’re gonna bring SmartCentre right along with it. So, this is a great combination of excellent current dividend yield, 6.7%, and a significant opportunity for ongoing growth to those dividends, but just from a company basis as well, which is perfectly suited to sticking in one’s TFSA and just leaving it alone.

Nick: That’s right, so if you’re looking for monthly income, this may not be the biggest performer in your portfolio in terms of percentage return, but reliable income checks each month, with really a growth story that’s still intact.

Iain, thanks so much for joining us for this edition of The Five-Minute Major. Reminder to our viewers, if you want more stock ideas from us, click on the icon in the upper right of your screen. Thanks for joining us for this episode of The Five-Minute Major. Hope to see you next time.

The post The Top TFSA Stock for Monthly Income in 2026 appeared first on The Motley Fool Canada.

More reading

• How Putting $20,000 in These 4 TFSA Stocks Could Generate $1,200 in Passive Income
• How to Use Your TFSA to Generate $500 a Month – Tax-Free
• This Monthly Passive-Income Stock Yields 6.5% — and I Keep Adding More 
• How to Use Just $20,000 to Turn Your TFSA Into a Reliable Cash-Generating Machine
• 2 High-Yield Dividend Stocks That Could Be a Safer Bet for Canadian Retirees

Fool contributor Iain Butler has positions in SmartCentres Real Estate Investment Trust. Fool contributor Nicholas Sciple has no position in any of the stocks mentioned. The Motley Fool recommends SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.

Using a TFSA as a mere savings account is a terrible idea. Proper use of the account can create a comfortable retirement for Canadians — but you have to invest money in the account to unlock its full potential. (How does $4.7 million sound?)

Here’s how to get started investing in a TFSA for 2026.

Prefer to read? There’s a transcript below.

Nick Sciple: I’m Motley Fool Canada Senior Analyst Nick Sciple, and this is The Five-Minute Major, here to make you a smarter investor in about five minutes. Today, we’re discussing the new 2026 TFSA contribution limits and how to invest that new room. My guest today is Hidden Gems Canada Lead Advisor, Jim Gillies. Jim, thanks for joining me.

Jim Gillies: Thank you for the invite, Nick. I love the TFSA, and I’m thrilled to be talking about it today.

Nick: Happy New Year, everybody! It is officially January, which means the CRA has handed Canadian adults the new TFSA contribution room. What do investors need to know about these new numbers, and more importantly, what is the biggest mistake you see people making when they invest in their TFSA?

Jim: Oh, boy, do I have some thoughts, Nick. The TFSA, of course, stands for Tax-Free Savings Account, and there are two important things to take away from the name there. First of all, the tax-free’s the good part.

What is the TFSA contribution limit for 2026?

But we’re gonna talk about the problem in a minute. But, okay, so you’re getting $7,000 of contribution room. You’re not getting free money here, but it’s money that you can contribute and save for the future for your retirement years, or for your future just in general, if you don’t particularly want to retire, or whatever.

This started back in, I think, 2009, 2010, with I think it was $5,000 of contribution room, and it was indexed to inflation, moving in $500 increments.

So if inflation was 2% a year, 3% a year, you know, about after four or five years, it went to $5,500, then it was $6,000, it was briefly $10,000; that’s a whole political thing.

Last year was $7,000, this year’s gonna be $7,000. Probably, if inflation follows its current path, it’s gonna be about $7,500 next year. So you’ve got all of this contribution, and it’s cumulative.

If you’ve not filled your prior contribution room, get on that, okay?

Biggest mistake Canadians make with TFSA accounts

The second thing is a disturbing number of Canadians do not use the TFSA.

And the TFSA is the most powerful wealth-building tool that you have in your Canadian savings arsenal, yes? Above the RRSP, okay?

Especially if you’re a younger Canadian, TFSA should be absolute your top priority. Now, the problem with the name: I hate the name “Tax-Free Savings Account.” This is not a savings account. This is a wealth-building tool, and I hate when I see [that] roughly, just over half of Canadians have TFSAs. And the ones that have it, about half of them use it as a savings account, so they throw it in money, they make it in cash, might earn 2 or 3%, they throw it in GICs. It’s terrible! No! No! This is a wealth creation tool, okay?

How much money can you make in a TFSA over time?

So, steady contributions. And for example, if you were 20 years old today, and you started today, and let’s assume inflation for the next four decades, 40 years, is 2%. And let’s assume you can earn roughly 10%, which is roughly the stock market’s return since the modern-day annualized return. If you start at age 20, go to age 60, maximize your contribution every year. Figure out what you need to do, or figure out what you need to contribute every pay period. Again, the contribution room goes up in $500 increments following CPI. So let’s assume CPI is 2%, you fill out your contribution total, you make 10% returns. Over a 40-year period, you will have contributed about $450,500.

The value of that account in 40 years will be just shy of $4.7 million. Okay? Tax-free. You will owe nothing to the government.

That is why I hate the term “savings account.” This is not a savings account.

Maximize your contribution, invest it, never touch it.

You will have a wonderful retirement.

Where to invest in a TFSA in 2026

Nick: Okay, Jim, so maximize your contribution. This is a wealth-building vehicle. You shouldn’t be holding cash in your TFSA, so that leads us to another question. What should you be holding? What would you be investing this new TFSA room, this new capital, into your TFSA portfolio in 2026? What investments would you be looking at?

Jim: I mean, obviously, it’s personal, everyone’s gonna be different, okay? But I’m gonna say two things. One, first, No. 1, the biggest risk with a TFSA is not contributing, not making use of the incredible tool. The second-biggest risk is not taking enough risk. This is not a savings account, don’t put it in GICs, don’t keep it in cash.

I’m just gonna take this approach for a new investor, or my son. My son is 21 years old, we’ve been contributing since he was 18. Okay, it’s his money, not mine.

If you do nothing else — and I would encourage you to do nothing else before you have $100,000 in this account — but if you do nothing else, contribute to index-hugging ETFs. So, get one that tracks the Canadian market, so that’s the TSX60. (TSX: XIU), I believe, is the one that tracks it. That’s XIU on the Toronto Stock Exchange.

As well, you want to track the S&P 500. There’s a host of S&P 500 tracking tools. And then maybe if you even want to add in a little Pan-Asian, Pan-European, index as well, I believe XEF (TSX: XEF) is the one on the TSX that iShares offers. And if you did a 25%, 50%, 25% allocation across those three, and then never touch it, keep on adding every year when a new contribution room comes up, DRIP all your dividends — that means reinvest your dividends automatically, you can get your broker to do that for you — you will have an obscene amount of tax-free money, tax-free capital, by the time you hit 60, [if you’re] using this as a wealth creation, retirement tool, and not a savings account.

Nick: Yeah, it’s great advice. This is a wealth creation tool. Participate, and try to participate in the stock market if you can. That’s all our time for this edition of the Five-Minute Major. If you want more stock and investing ideas from us, click on the info icon in the upper right-hand corner. Until then, thanks for joining us, and Fool on!

The post TFSA 2026: The $109,000 Opportunity and How Canadians Should Invest It appeared first on The Motley Fool Canada.

More reading

• 3 Canadian ETFs I’d Tuck Into a TFSA and Never Consider Selling
• Why Canadian Dividend ETFs Could Be the Simplest Way to Defend Your Portfolio
• How Do Most Canadians’ TFSA Balances Look at Age 30?
• 2 Canadian ETFs I’d Lock Into a TFSA and Never Touch
• 3 Canadian ETFs I’d Seriously Consider Adding to My Portfolio in 2026

Fool contributor Jim Gillies has positions in iShares Core Msci Eafe Imi Index ETF and iShares S&p/tsx 60 Index ETF. Fool contributor Nicholas Sciple 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.

The Tax-Free Savings Account (TFSA) contribution limit has increased to $7,000 in 2025. Every year, the TFSA contribution limit is indexed to inflation and rounded to the nearest $500. For eligible Canadians who have never contributed to the TFSA since 2009, the total cumulative contribution room has increased to $102,000 by 2025.

Despite this valuable opportunity, many Canadians make costly mistakes undermining their tax-free savings potential. Here are three TFSA mistakes Canadian investors should avoid in 2025.

Holding too much cash in a TFSA

Nearly half of TFSA holders keep their savings in cash, missing significant growth opportunities. While cash provides security, holding investments like stocks, bonds, exchange-traded funds (ETFs), or mutual funds within a TFSA can generate substantially higher returns over time, all completely tax-free.

Over-contributing to your TFSA

Over-contribution remains a serious concern for 2025. Exceeding the $7,000 limit or your available contribution room triggers a harsh 1% monthly penalty on the excess amount. Unlike RRSPs (Registered Retirement Savings Plans), TFSAs offer no grace buffer, and penalties apply from the first excess dollar. The Canada Revenue Agency monitors contributions closely and will send notices demanding immediate withdrawal of excess amounts.

For example, over-contributing by $2,100 in October and leaving it uncorrected through December would result in $63 in penalties. The key is withdrawing excess contributions immediately upon discovery.

Misunderstanding withdrawal and re-contribution rules

The third mistake involves misunderstanding withdrawal rules. Money withdrawn from a TFSA cannot be re-contributed in the same calendar year without triggering over-contribution penalties. Withdrawn amounts only restore contribution room at the beginning of the following year.

Proper TFSA management requires understanding these rules, investing for growth rather than holding cash, and carefully tracking contribution limits to maximize this powerful tax-free savings vehicle.

Consider holding quality growth stocks in the TFSA

While several Canadians hold cash in the TFSA, the tax-sheltered status of the registered account makes it ideal to hold quality growth stocks such as goeasy (TSX:GSY). An investment of $1,000 in goeasy stock back in 2009 would be worth $17,000 today. The cumulative returns are closer to $27,000 if we adjust for dividend reinvestments.

Valued at a market cap of $2.4 billion, goeasy provides non-prime leasing and lending services to Canadian consumers. It offers unsecured and secured installment loans, home equity and improvements, automotive vehicle financing, and more.

Despite its outsized gains, the TSX stock trades 30% below all-time highs, allowing you to buy the dip and benefit from a forward dividend yield of 3.1%.

goeasy has increased revenue from $347.5 million in 2016 to $1.52 billion in 2024. Analysts expect revenue to grow at a compounded annual growth rate of 10.5% over the next three years. Comparatively, adjusted earnings are forecast to expand from $16.7 in 2024 to $25.6 in 2027.

goeasy stock trades at a forward price-to-earnings ratio of 7.9 times, below its 10-year historical average of 9.8 times. If GSY stock is priced at nine times forward earnings, it will trade around $240 per share in early 2027, above the current trading price of $151.

Given consensus price targets, analysts remain bullish on the TSX dividend stock and expect it to gain over 40% in the next 12 months.

The post 3 TFSA Mistakes Canadian Investors Should Avoid in 2025 appeared first on The Motley Fool Canada.

More reading

• 10% Yield: Here’s the Dividend Trap to Avoid in April
• Down Almost 82% From Its All-Time High, Is goeasy Still a Buy?

Fool contributor Aditya Raghunath 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.