A Perfect TFSA Stock: A 3.24% Yield With Stable Paycheques

The best Tax-Free Savings Account (TFSA) income is the kind that shows up without inviting the taxman to brunch.

That is the charm of using a TFSA for dividend investing. You can earn income, let it compound, withdraw it when needed, and avoid turning every payment into a tiny tax-season headache. Lovely, rare, and almost suspiciously helpful.

The Canada Revenue Agency says interest, dividends, and capital gains earned in a TFSA are generally not taxable while held in the account or when withdrawn. That makes the TFSA especially useful for investors who want retirement income, emergency cash flow, or a future “please let me stop working on Mondays” fund.

That is where investors need to be practical. Some of the best income stocks pay quarterly, and investors can still turn those payments into monthly cash flow by setting aside one-third of each payment every month. Is it a little less magical? Sure. Does it still work? Absolutely. And investors looking for that kind of TFSA income stock may want to look at Sun Life Financial (TSX:SLF).

SLF

Sun Life is one of Canada’s largest financial services companies, with operations across insurance, wealth, asset management, group benefits, and retirement services. It earns money from helping people protect their families, manage savings, and plan for the future. Very sensible, very adult, like the cardigan of financial stocks.

That business can work well inside a TFSA, as SLF stock offers both income and long-term growth potential. Insurance and wealth management may not make investors gasp at dinner parties, but they do connect to huge demographic trends. Canadians are aging, retirement planning remains a major issue, and global demand for protection and wealth products keeps growing.

Numbers don’t lie

SLF stock’s current dividend makes the income case offering a yield of about 3.24% at writing while trading at about 21 times earnings. What’s more, the latest results support the case. In the first quarter of 2026, SLF stock reported an underlying return on equity (ROE) of 18.6%, up from 17.7% a year earlier.

ROE is the number to watch here. It shows how effectively SLF stock turns shareholder capital into profit. A strong ROE suggests the company is not just paying a dividend because investors enjoy seeing cash appear. It’s earning enough to support growth, reinvestment, and shareholder returns.

Considerations

There are points to consider. The risk is that financial stocks still depend on markets, interest rates, claims trends, and investor confidence. SLF stock’s asset management business can face pressure when markets weaken or clients pull money. Insurance results can also move around if claims rise or economic conditions deteriorate.

Still, SLF stock looks like a strong TFSA candidate for investors who want income without reaching for a risky yield. It will not create true monthly dividends on its own, and investors should not pretend otherwise. Yet a steady quarterly dividend can even become a monthly cash flow with a simple plan.

Bottom line

A TFSA built around dependable income does not need circus tricks. SLF stock offers a solid yield, a growing dividend, and a business tied to long-term financial needs. For investors building tax-free income, that kind of stock deserves a close look before the next dividend payment rolls around.

The post A Perfect TFSA Stock: A 3.24% Yield With Stable Paycheques appeared first on The Motley Fool Canada.

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More reading

• What Does the Average Canadian’s TFSA Look Like at 55?
• What the Average Canadian Has in a TFSA by Age 55
• 3 Canadian Blue-Chip Stocks to Hold Through 2026 and Beyond
• When Does a Taxable Account Actually Beat a TFSA? Here’s The Answer

Fool contributor Amy Legate-Wolfe 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.