A 5.7%-Yielding TFSA Pick That Pays Consistent Cash

Today is April Fools’ Day — but this is no joke. If you’re looking for reliable, tax-free income, this 5.7%-yielding stock could be a compelling addition to your Tax Free Savings Account (TFSA), especially on market corrections. Better yet, it pays investors consistent cash every single month — an increasingly rare feature in today’s market.

A reliable monthly income machine

CT REIT (TSX:CRT.UN) has quietly built a reputation as one of Canada’s most dependable income investments. The real estate investment trust (REIT) has increased its cash distribution for roughly 13 consecutive years, supported by a solid 10-year growth rate of 3.5%.

Its structure is a major advantage. As a net lease REIT, tenants cover at least one of many property-related expenses — such as property taxes, insurance, and maintenance — on top of base rent. This reduces cost volatility for the landlord and results in income that’s more predictable and stable. For investors, that translates into dependable monthly payouts that can compound tax-free inside a TFSA.

Backed by a retail giant

One of the strongest aspects of CT REIT is its deep connection to Canadian Tire. The retail giant accounts for 90.7% of the REIT’s rental income and 92.1% of its gross leasable area (GLA). This includes well-known banners like SportChek, Mark’s, and Gas+.

While some might see this concentration as a risk, it actually provides stability. Canadian Tire is a resilient, nationally recognized retailer with a long operating history and strong real estate strategy. Its presence gives CT REIT a dependable anchor tenant that consistently meets its lease obligations.
Beyond Canadian Tire, the REIT is further supported by a roster of high-quality tenants. These include Loblaw, TJX, Bank of Montreal, and Restaurant Brands International. Together, these tenants add diversification and reinforce the REIT’s income reliability.

Strong fundamentals and steady growth

CT REIT’s portfolio is both large and efficient. It owns approximately 375 properties spanning 31.7 million square feet, with an exceptional occupancy rate near 99.5%. Its weighted average lease term of about seven years further enhances income visibility.

Financially, the REIT continues to deliver steady growth. Over the past five years, adjusted funds from operations (AFFO) per unit have grown at an annual rate of 4.1%, while net asset value (NAV) per unit has climbed 4.8% annually. Distributions have also sustainably increased by 3.4% annually, reinforcing its appeal as a long-term income investment by generating income that maintains purchasing power for its investors.

At $16.54 per unit at writing, CT REIT trades near its historical valuation levels. Analysts’ consensus price target of $17.49 also suggests a fairly-valued stock, but the real attraction here isn’t rapid capital gains — it’s dependable income. Investors can reasonably expect total annual returns in the range of 7% to 9%, driven largely by its 5.7% yield and modest distribution growth of about 2–3% annually.

Investor takeaway

For investors seeking stable, tax-efficient income, CT REIT checks all the right boxes. It offers a high and reliable monthly yield, strong tenant backing led by Canadian Tire, and consistent long-term growth. While it may not be a high-flying stock, its predictability and income strength make it an excellent TFSA holding for building lasting wealth.

The post A 5.7%-Yielding TFSA Pick That Pays Consistent Cash appeared first on The Motley Fool Canada.

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More reading

• How to Create Your Own Pension With Dividend Stocks
• 4 Canadian Stocks to Buy if You Want Instant Income
• The Best Dividend Stocks to Buy and Hold Forever
• Up 16% in a Year and Paying 5.6%: A Canadian Income Play the Market Forgot
• 3 Canadian Dividend Stocks That Could Survive a Recession

Fool contributor Kay Ng has positions in Restaurant Brands International. The Motley Fool recommends Restaurant Brands International and TJX Companies. The Motley Fool has a disclosure policy.