How to Use Your TFSA to Earn $150 Per Month in Tax-Free Income

Investing in dividend stocks with monthly payouts through the Tax-Free Savings Account (TFSA) can help generate tax-free income. The dividends or capital earned in a TFSA aren’t taxed. Thus, it enhances your portfolio’s income potential and overall returns. However, one should focus on fundamentally strong companies to generate worry-free income.

With this background, let’s explore a top Canadian stock that can help you earn $150 in tax-free income per month. It offers a high yield, making it a compelling investment near the current market price.

SmartCentres REIT 

TFSA investors could consider adding SmartCentres REIT (TSX:SRU.UN) stock to their portfolio. It operates as a real estate investment trust (REIT), offering high-yield and reliable monthly payouts. The firm owns a resilient portfolio of mixed-use properties in prime locations, which drives its net operating income and regular payouts.

One of SmartCentres’s key strengths is its core retail properties, which are predominantly grocery-anchored shopping centres. These assets are immune to economic volatility, generate consistent income, and maintain high tenant retention rates. This stability translates into predictable payouts for investors.

The REIT currently pays a monthly dividend of $0.154 per share. This translates into a high yield of 7.6% based on its closing price of $24.44 on January 08, 2025.

Why add SmartCentres stock to a TFSA portfolio?

The company’s retail portfolio generates strong traffic and sees solid demand in all market conditions. Further, these properties have a high occupancy rate and rent collection. Its properties have an impressive tenant retention rate, boast high occupancy levels, and generate steady rent collection, making the core retail business a reliable driver of financial performance. Notably, this segment benefits from strong demand for additional locations and expansions from new and existing tenants.

Beyond retail, SmartCentres is poised for significant growth through its mixed-use development initiatives. These projects will diversify its income streams, with assets spanning multi-residential, self-storage, office, and industrial spaces. This diversified approach reduces risk and creates opportunities for recurring revenue across multiple formats.

SmartCentres’s ability to attract and retain tenants drives its occupancy rate. As of the third quarter of 2024, its occupancy rate was an impressive 98.5%. Additionally, the REIT successfully renewed and extended lease agreements at strong rental growth rates, which reflect the continued demand for its properties.

The positive momentum in leasing activity and rental renewals will likely continue, providing a stable base for future income. SmartCentres’s substantial land bank—already owned by the REIT—further strengthens its growth prospects. Its large land bank and access to ample capital position it well to pursue new developments and expansions.

Earn $150 tax-free every month

SmartCentres REIT is a dependable stock to earn steady monthly cash. Its core retail business provides a solid foundation for continued income growth. Moreover, its diversification into mixed-use properties will enable it to generate recurring income. Its high yield and steady payouts make it a compelling investment to add to your TFSA portfolio and generate tax-free income.

The table shows that an investment of $23,900 in SmartCentres stock can help you earn over $150 in tax-free income per month.