A Perfect February TFSA With a 7.5% Monthly Payout

A monthly dividend stock can feel like it was built for February. The holidays have finished draining wallets, the Tax-Free Savings Account (TFSA) contribution season sits front and centre, and most people want momentum that feels real, not theoretical. A monthly payer turns “I should invest” into a rhythm, because the cash flow shows up regularly and can be reinvested quickly inside a TFSA.

SGR

Slate Grocery REIT (TSX:SGR.UN) owns U.S. grocery-anchored retail real estate, which is a fancy way of saying it collects rent from centres anchored by the kinds of tenants people keep visiting even when budgets tighten. It pitches itself as “critical real estate infrastructure” tied to everyday needs, and that positioning matters because it aims to reduce the drama that can come with other retail or office landlords.

Over the last year, most of the headline flow has looked like steady knitting, not splashy reinvention. It kept declaring an annual distribution of $1.18, which keeps income investors paying attention. That consistency sounds boring, and boring is often the point in a monthly-income TFSA pick.

The other big theme has been leasing and balance-sheet housekeeping. In its latest year-end update, it highlighted high leasing volume, stable occupancy of 94.4% at year-end, and a big gap between in-place rent and estimated market rent, which it frames as a runway for future rent growth. In short, it thinks it can lift rents over time without needing perfect economic conditions.

Earnings support

Now, for the numbers that actually pay the bills. In the fourth quarter (Q4) of 2025, rental revenue came in at US$54.6 million and net operating income (NOI) landed at US$42.2 million. It posted funds from operations (FFO) of US$14.9 million, or US$0.25 per unit, and adjusted FFO (AFFO) of US$11.7 million, or US$0.19 per unit. Those are the cash-flow measures real estate investment trust (REIT) investors tend to watch, as these help you judge whether the distribution has real support.

That support looks a bit tight on an AFFO basis right now. The Q4 AFFO payout ratio showed 110.8%, which means the distribution ran ahead of that quarter’s AFFO. That may not automatically mean danger tomorrow, but it does mean you should pay attention to whether leasing momentum and financing costs keep moving in the right direction.

On outlook and valuation, the story is mixed in a useful way. It said most of its debt sits at fixed rates, with a weighted average interest rate of 5% and 87.8% of debt fixed, which can help keep cash flow steadier if borrowing costs bounce around. On the market side, units have traded around the $15.70 range lately, and the forward yield sits roughly in the 7.5% range, which explains why income hunters keep circling it. Right now, here’s what even $15,000 can bring in from income alone.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTSGR.UN$15.70955$1.18$1,126.90Monthly$14,993.50

Bottom line

So, could it be a buy for monthly income seekers? Certainly, if someone wants a TFSA-friendly, monthly-paying REIT tied to essential retail and can live with the trade-offs. The biggest “yes” is the steady distribution and the grocery-anchored focus. The biggest “maybe” is that AFFO coverage looks stretched in the latest quarter, so it suits investors who will actually monitor results instead of buying it and forgetting it exists.

The post A Perfect February TFSA With a 7.5% Monthly Payout appeared first on The Motley Fool Canada.

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More reading

• This TSX Stock Could Pay You While You Wait
• Invest $40,000 in This Dividend Stock for $250 in Monthly Passive Income
• This 7.3% Dividend Stock Pays Cash Every Single Month
• This 7 Percent Dividend Stock Pays Cash Every Single Month
• How to Structure a $75,000 TFSA for Practically Constant Income

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