Turn Any TFSA Into a $400/Month Dividend Machine

Creating a monthly dividend machine inside a Tax-Free Savings Account (TFSA) that produces $400 a month is one of the most relatable financial goals ever. This gives you something real and tangible, money that shows up like a second paycheque without you having to work extra hours or take on more stress. Instead of watching every price increase chip away at your budget, that steady, tax-free income gives you breathing room for groceries, kids’ activities, a tank of gas, or even a small weekend getaway.

Plus, because it’s in a TFSA, every dollar lands in your pocket with zero tax, which means you don’t need a huge portfolio to make it worthwhile. It’s a simple, practical way to build financial confidence: your investments quietly do the heavy lifting, your income grows on its own, and life suddenly feels a little lighter each month.

Getting started

Turning any TFSA into a $400-per-month dividend machine starts with understanding the power of tax-free compounding. Because a TFSA shields every dividend and every bit of growth from taxes, each payout can be reinvested in full, accelerating the pace at which your income grows. You don’t need to start with a huge balance either. The key is choosing reliable dividend stocks with sustainable yields and sticking to a long-term plan. Monthly payers can smooth out your cash flow and make it feel like a second paycheque.

The next step is structuring the account with a blend of monthly income stocks and dividend-growth names. Monthly payers create predictable cash flow right away, while strong dividend growers increase your income over time. You don’t need a full amount to create that $400 per month either. Annual contributions, reinvested dividends, and the natural growth of quality companies can get you there steadily. Even small additions compound faster inside a TFSA because none of the returns are lost to tax.

Yet the real secret is consistency. Reinvesting dividends during the early years is like adding more fuel to the fire, as does buying more units that immediately start paying you as well. Choosing sectors with strong cash-flow stability helps anchor your income so it doesn’t disappear when markets wobble. With time, the TFSA becomes more than just a savings vehicle, but a permanent, tax-free income stream.

Consider PZA

Plaza Retail REIT (TSX:PLZ.UN) is a small but steady retail-focused REIT built around necessity-based tenants. These include pharmacies, dollar stores, discount grocers, and service retailers, businesses that stay resilient no matter what the economy throws at them. The REIT operates mainly in Atlantic Canada, Québec, and Ontario, where it has carved out a defensive niche by developing and owning open-air centres anchored by national brands. Its properties tend to be in strong suburban trade areas with stable foot traffic, giving Plaza a consistent base of rental income and helping it maintain one of the most reliable distribution records among small-cap Canadian REITs.

Recent earnings highlighted that Plaza continues to deliver solid performance despite broader real estate challenges. The REIT reported strong leasing momentum, healthy renewal spreads, and stable occupancy levels in the mid-to-high 90% range. Same-property net operating income grew modestly, supported by long-term leases with national tenants and a development pipeline that continues to add gradual growth from properties in the portfolio. While higher interest costs affected results, Plaza managed its debt profile responsibly, kept its payout ratio in a sustainable range, and reaffirmed its monthly distribution.

Speaking of the distribution, PLZ.UN offers a stellar 6.8% yield at writing. Its monthly payout is backed by retailers Canadians rely on every week, which helps insulate the REIT from economic swings. Plaza’s smaller size also means it has room to grow through development and redevelopment, gradually improving cash flow over time. Here is what investors can do to create $400 in monthly income.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTPLZ.UN$4.1417,142$0.28$4,799.76Monthly$70,038.88

Bottom line

For TFSA investors, that steady, predictable income, delivered monthly and sheltered entirely from tax makes PLZ.UN an attractive building block in a diversified income portfolio – one that aims to produce reliable, life-improving cash every single month.

The post Turn Any TFSA Into a $400/Month Dividend Machine appeared first on The Motley Fool Canada.

Should you invest $1,000 in Dollarama Inc. right now?

Before you buy stock in Dollarama Inc., consider this:

The Motley Fool Stock Advisor Canada analyst team identified what they believe are the 15 best stocks for investors to buy now… and Dollarama Inc. wasn’t one of them. The 15 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 … if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,105.89!*

Now, it’s worth noting Stock Advisor Canada’s total average return is 95%* – a market-crushing outperformance compared to 72%* for the S&P/TSX Composite Index. Don’t miss out on our top 15 list, available when you join Stock Advisor Canada.

See the 15 Stocks #start_btn6 { background: #0e6d04 none repeat scroll 0 0; color: #fff; font-size: 1.2em; font-family: 'Montserrat', sans-serif; font-weight: 600; height: auto; line-height: 1.2em; margin: 30px 0; max-width: 350px; text-align: center; width: auto; box-shadow: 0 1px 0 rgba(0, 0, 0, 0.5), 0 1px 0 #fff inset, 0 0 2px rgba(0, 0, 0, 0.2); border-radius: 5px; } #start_btn6 a { color: #fff; display: block; padding: 20px; padding-right:1em; padding-left:1em; } #start_btn6 a:hover { background: #FFE300 none repeat scroll 0 0; color: #000; } @media (max-width: 480px) { div#start_btn6 { font-size:1.1em; max-width: 320px;} } margin_bottom_5 { margin-bottom:5px; } margin_top_10 { margin-top:10px; }

* Returns as of November 17th, 2025

More reading

• My 2 Favourite Stocks to Buy Right Now
• With the Economy So Uncertain, Don’t Put Just Any Stock Into Your TFSA: These 3 Look OK.
• Got $7,000? Your TFSA Wants You to Buy These Stocks
• Top Canadian Stocks to Buy Now for Long-Term Growth
• The Best TSX Stocks for Canadians to Buy With $1,000 on Hand

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Dollarama. The Motley Fool has a disclosure policy.