A Strong TFSA Stock Offering a 6.3% Yield and Monthly Paycheques

For Canadians looking to build tax-free passive income, holding quality dividend stocks in a Tax-Free Savings Account (TFSA) can be a highly effective long-term strategy.

Among dividend stocks, those that pay monthly distributions are particularly appealing. Monthly payments can create a steady stream of income that resembles a regular paycheque, making them useful for investors seeking additional cash flow or those who prefer to reinvest dividends more frequently to accelerate portfolio growth.

However, as dividends are not guaranteed, investors should focus on companies with strong fundamentals, resilient cash flows, sustainable payout ratios, and a proven history of rewarding shareholders across market cycles.

Against this background, here is a strong TFSA stock offering a 6.3% yield and monthly distributions.

This TFSA dividend stock pays monthly and yields 6.3%

For TFSA investors seeking monthly income, SmartCentres REIT (TSX:SRU.UN) is an attractive option. The REIT currently offers a high yield and distributes cash to shareholders every month.

Supporting SmartCentres’ investment case is its long track record of consistent distributions backed by resilient cash flow. The REIT owns a diversified portfolio of retail and mixed-use properties, many of which are located in high-demand markets where leasing activity remains strong.

These prime locations help SmartCentres maintain healthy occupancy levels while generating higher rental income. As a result, the REIT continues to generate stable net operating income (NOI), providing solid support for its monthly payouts.

Another key strength is its high-quality tenant base. Strong tenants reduce collection risk and help keep rental income flowing even during periods of economic uncertainty.

Thanks to its combination of high-traffic properties, dependable tenants, and steady cash flow, SmartCentres remains well-positioned to continue rewarding investors. The REIT currently pays $0.154 per unit every month, translating to an annualized yield of roughly 6.3% based on its May 29 closing price of $28.98.

SmartCentres to keep rewarding investors

SmartCentres REIT has started 2026 on a strong footing, benefiting from resilient retail demand, rising rental rates, and consistently high occupancy across its portfolio. Strong customer traffic and a stable tenant base helped drive growth in same-property NOI, while leasing and renewal activity continued to lift rental revenue.

The REIT’s leasing performance remains a key strength. About 80% of 2026 lease maturities have already been completed at attractive rent increases. Excluding anchor tenants, renewal rents rose 11.5%, underscoring the pricing power of its retail properties. Tenant retention remained excellent, supported by near-99% rent collections and ongoing demand from retailers.

Leasing momentum also stayed healthy. At the same time, demand for newly developed retail space continued to improve. As of March 31, 2026, SmartCentres reported an in-place and committed occupancy rate of 97.6%. Same-property NOI increased 1.4%, or 3.4% when excluding anchor tenants.

Looking ahead, SmartCentres appears well-positioned to maintain its distributions. Its large pipeline of retail and mixed-use developments, combined with a substantial underutilized landbank, provides meaningful long-term growth opportunities.

Further, ongoing portfolio enhancements and development projects are expected to support higher funds from operations (FFO), sustainable distributions, and growth in net asset value. Overall, SmartCentres REIT remains an attractive investment to generate tax-free monthly income.

The post A Strong TFSA Stock Offering a 6.3% Yield and Monthly Paycheques appeared first on The Motley Fool Canada.

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* Returns as of June 1st, 2026

More reading

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• 2 High-Yield Dividend Stocks to Own for the Next 10 Years
• Got $14,000? Turn Your TFSA Into a Cash-Gushing Machine

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.