A Perfect May TFSA With a 4% Monthly Payout

Not every stock in your Tax-Free Savings Account (TFSA) needs to deliver explosive returns to be valuable. For many investors, the ideal holding is one that quietly generates dependable monthly income while continuing to grow steadily over time. That combination could become especially attractive during market volatility when stability matters more than chasing high-growth stocks.

One Canadian real estate investment trust (REIT) appears to offer exactly that balance right now. The company owns a large portfolio of apartment properties across Canada and continues benefiting from strong occupancy levels and resilient housing demand. At the same time, its disciplined expansion projects and rising cash flow are supporting its monthly payouts, with a yield of roughly 4%. Let’s discuss why this monthly dividend stock could be a perfect addition to your TFSA portfolio this May.

A residential REIT with steady momentum

The stock I’d point to here is Killam Apartment REIT (TSX: KMP.UN), which has been quietly benefiting from strong demand in Canada’s rental housing market. If you don’t know it already, it mainly operates and develops apartments and manufactured home communities across Canada. The company’s portfolio is currently valued at roughly $5.5 billion and benefits from geographic diversification, with strong exposure to Atlantic Canada.

After gaining nearly 11% over the last 30 days, Killam stock trades around $18 per share, giving it a market cap of more than $2.2 billion. Strong occupancy trends have played an important role in its recent rally.

Notably, Killam posted healthy apartment occupancy levels of 97% in the first quarter of 2026, helping support stable rental revenue growth across its portfolio. The REIT’s Atlantic Canadian markets continue performing especially well, benefiting from population growth and sustained housing demand.

Strong operational performance continues

In addition to solid occupancy, Killam Apartment REIT’s latest quarterly results highlighted the resilience of its business model despite broader economic uncertainty. Its same-property apartment portfolio generated net operating income (NOI) growth of 4% year-over-year (YoY) with the help of a 3.6% increase in its same-property apartment revenue.

Overall, the REIT’s NOI increased 5.1% YoY to $62 million, reflecting strong operational execution and improving property performance. While its reported net profit declined to $50.3 million in the latest quarter from $101.9 million a year ago, that drop was mainly due to lower fair-value gains on its investment properties rather than weakening operations.

More importantly for REIT investors, Killam’s funds from operations (FFO) remained stable at $0.28 per unit, while its adjusted funds from operations (AFFO) increased 4.3% YoY to $0.24 per unit. That AFFO growth clearly reflected the company’s disciplined capital recycling strategy, where older assets are sold, and capital is reinvested into newer and more efficient properties.

Meanwhile, its investors also continue benefiting from reliable monthly income as it currently offers a dividend yield of roughly 4%, with a monthly distribution.

Why this TFSA stock still looks attractive for monthly income

Beyond stable income, Killam continues to boost its future growth prospects through development projects and shareholder-friendly initiatives. The company recently completed Brightwood, a new residential development in Waterloo, ahead of schedule and below budget. Its leasing activity has been strong, which could support future revenue growth.

Encouraged by its latest results, Killam’s management recently raised its same-property apartment revenue growth target for 2026 to above 3.5%, reflecting confidence in market conditions and rental demand. At the same time, Killam is actively repurchasing its shares as it deployed more than $6 million toward share buybacks during the first quarter alone.

With stable occupancy, growing cash flow, disciplined capital allocation, and a reliable monthly payout, Killam Apartment REIT looks like an amazing TFSA stock for investors seeking both monthly income and long-term stability.

The post A Perfect May TFSA With a 4% Monthly Payout appeared first on The Motley Fool Canada.

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More reading

• 2 Dividend Stocks Paying Cash Every Month
• This Practically Perfect 4% REIT Pays Monthly
• 5 TSX Dividend Stocks for Steady Cash Flow in Any Market
• 5 Dividend Stocks Worth a Spot in Nearly Any Canadian Portfolio

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.