Turn Any TFSA Into $600 in Monthly Dividend Income

Turning a Tax-Free Savings Account (TFSA) into monthly dividend income might seem like a difficult matter. However, there are a few items to consider here. And these are items that investors need to ask themselves: what are my goals, and what is my risk tolerance? Once you have those answers, the list of items that can create income in a TFSA becomes a lot narrower. That’s why we’re going to look at how to get started once you have those goals in mind and some strong options to consider on the TSX today.

Getting started

It all starts with choosing investments that pay regularly and reliably. Monthly dividend stocks and income exchange-traded funds (ETFs) work especially well as these line up with real-life expenses like bills, groceries, or travel. Inside a TFSA, every dollar of income arrives tax-free, which means you don’t lose a portion of your payout to the Canada Revenue Agency (CRA). That makes even moderate yields far more powerful over time, especially when distributions are consistent and predictable.

The next step is diversification and discipline. Instead of relying on one stock, investors often spread their TFSA across a few monthly payers in different sectors. These include real estate investment trusts (REITs), infrastructure, and dividend-focused ETFs. Early on, reinvesting part or all of the monthly income helps accelerate compounding. Over time, that same portfolio can shift from reinvestment to income use, creating a steady stream of tax-free cash that grows alongside your TFSA balance.

An infrastructure REIT

Granite REIT (TSX:GRT.UN) is one of Canada’s highest-quality industrial real estate owners, with properties spread across North America and Europe. It focuses on logistics, warehouse, and light industrial assets that support e-commerce and global supply chains. In its recent earnings, Granite continued to report stable rental income, high occupancy, and strong rent collection, reflecting the essential nature of its properties. Management also highlighted a conservative balance sheet and disciplined capital allocation, which have helped it navigate higher interest rates without major disruption.

Granite now looks like a solid option for monthly income because its fundamentals remain intact while the broader REIT sector has been under pressure. Its long-term leases, strong tenants, and focus on essential industrial space support predictable cash flow. As interest rate fears ease over time, investors collecting Granite’s monthly distribution get paid to wait while benefiting from potential price recovery.

Income ETF

iShares S&P/TSX Composite High Dividend Index ETF (TSX:XEI) is a Canadian high-dividend ETF that holds a diversified basket of large, established dividend-paying companies across sectors like banks, pipelines, utilities, and telecoms. Its recent performance has been driven by the steady earnings and dividend payments of its underlying holdings rather than market speculation. While XEI doesn’t report earnings like a company, its distributions reflect the ongoing strength of Canada’s dividend leaders, many of which continue to raise payouts despite economic uncertainty.

XEI could be a solid option for monthly income right now because it spreads risk across dozens of reliable dividend payers and delivers consistent cash flow. For TFSA investors, it offers simplicity, stability, and dependable income without the need to manage individual stocks. When markets feel volatile and selective stock picking feels stressful, XEI provides a calm, income-focused way to generate tax-free monthly cash while staying invested in Canada’s strongest businesses.

Bottom line

Together, these two monthly dividend stocks are some of the best options out there. Each offers investors solid monthly income in areas that aren’t just doing well, but expanding. What’s more, you get the protection of an ETF that will continue to offer monthly income no matter what the market does. Right now, here’s how to create some strong monthly dividend income in any TFSA.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTGRT.UN$77.291,058$3.40$3,597.20Monthly$81,791.82XEI$32.173,000$1.54$3,600.00Monthly$96,510.00

In short, any TFSA can create enough income when you have the right investments. And right now, these two dividend stocks are some of the best options out there.

The post Turn Any TFSA Into $600 in Monthly Dividend Income appeared first on The Motley Fool Canada.

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More reading

• Monthly Dividend Leaders: 3 TSX Stocks Paying Dividends Every 30 Days
• What’s the Average RRSP Balance for a 70-Year-Old in Canada?
• TFSA Investors: How Couples Can Earn $10,700 Per Year in Tax-Free Passive Income
• Which Dividend Stocks in Canada Can Survive Rate Cuts?
• My Blueprint for Monthly Income Starting With $20,000

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Granite Real Estate Investment Trust. The Motley Fool has a disclosure policy.