A Perfect July TFSA With a 5% Monthly Payout

While finding a stock that pays a generous monthly income is easy, finding one that could continue growing while supporting those payouts is much harder. That’s why Tax-Free Savings Account (TFSA) investors should pay attention to businesses that combine strong operations with reliable cash flow instead of chasing the highest dividend yield on the market.

This July, one Canadian energy stock checks those boxes. It has been producing more oil and gas, raising its production outlook, and generating enough free cash flow to reward shareholders without stretching its finances.

Adding to the optimism, all those dividends could grow inside a TFSA without creating a tax bill. If you’re looking for an investment that offers both dependable monthly income and the potential for long-term capital appreciation, this energy stock could be one of the smartest additions to your TFSA right now. Let’s take a closer look.

Why Whitecap fits this income goal

The stock I’m looking at for a July TFSA focused on steady monthly income is Whitecap Resources (TSX:WCP). This oil-weighted producer holds assets across Alberta and Saskatchewan with exposure to both conventional and unconventional resource plays.

As of July 6, WCP stock traded at $14.43 per share with a market cap of $17.5 billion. At that price, the stock offers a dividend yield of roughly 5%.

Beyond those dividends, the stock has also impressed investors lately by delivering strong gains. Interestingly, Whitecap stock is up about 25% year to date, and has seen a 55% run over the last year. That strong performance clearly shows that investors have already been rewarding the company for its execution. That means the stock is not only paying income today, but also leaving room for capital gains over time.

Operational momentum is still strong

The ongoing strength in Whitecap’s operations and financials could be one of the key reasons why its stock has performed well in the last year.

In the first quarter, the company’s production reached a record 391,416 barrels of oil equivalent per day (boe/d), with liquids making up 62% of the total. New well productivity, improved cycle times, and strong base production all helped drive that result, which gave its management enough confidence to raise full-year guidance by 7,500 boe/d while keeping the same capital budget.

The financial side looked just as solid. In the latest quarter, its quarterly funds flow reached $0.84 per share, up 12% from a year ago. At the same time, its free funds flow came in at $349 million even as capital spending totalled $676 million. That is a strong sign the business could keep funding growth, supporting the dividend, and preserving flexibility at the same time.

A stronger balance sheet and bright growth prospects

Another reason Whitecap looks appealing is the way the company is tightening the balance sheet while staying ready for opportunity. Recently, the energy producer reduced its bank credit facility from $3 billion to $2.5 billion and pushed the maturity date out to September 19, 2030. That still leaves plenty of liquidity, but it also shows confidence in its financial position.

Meanwhile, Whitecap continues leaning into high-return projects in the Montney and Duvernay, where its new wells have outperformed expectations by 10%. That execution is a big reason WCP stock still looks attractive right now.

Overall, the company is producing more, generating healthy cash flow, and protecting its balance sheet without giving up growth. That makes it a great stock to invest in July 2026 for anyone who wants monthly income potential with long-term upside.

The post A Perfect July TFSA With a 5% Monthly Payout appeared first on The Motley Fool Canada.

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More reading

• 5 TSX Dividend Stocks With Solid Yields Built for Steady Cash Flow in Any Market
• My 2 Favourite Stocks for Monthly Passive Income
• A 4.8% Dividend Stock Paying Cash Every Month
• 2 High-Yield Dividend Stocks I’d Buy With $10,000 Right Now
• How to Build a Paycheque Portfolio With 2 Stocks That Pay Monthly

Fool contributor Jitendra Parashar 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.