Generate $500 in Tax-Free Monthly Income With This Easy Strategy

Investing in monthly dividend stocks is an effective strategy for generating stable and reliable passive income in today’s low-interest-rate environment. That said, dividends are never guaranteed. Investors should therefore focus on companies with solid underlying businesses, strong and predictable cash flows, and healthy long-term growth prospects to ensure sustainable income.

A $100,000 investment in monthly dividend stocks yielding over 6% can generate attractive monthly payouts of more than $500. Against this backdrop, here are three monthly dividend stocks that currently offer yields above 6%.

NorthWest Healthcare REIT

NorthWest Healthcare REIT (TSX:NWH.UN) owns and operates 167 properties across seven countries, encompassing 15.7 million square feet of gross leasable area. Supported by its highly defensive healthcare-focused assets and long-term lease agreements with a high-quality tenant base, the real estate investment trust (REIT) maintains a healthy occupancy rate. As of the end of the third quarter, its occupancy rate was 96.9%, while its weighted-average lease expiry was 13.4 years.

Since the beginning of fiscal 2024, the company has divested $1.3 billion in non-core assets, using the net proceeds primarily to repay debt and strengthen its balance sheet. Amid improving operating performance, NorthWest has reduced its AFFO (adjusted funds from operations) payout ratio from 99% in the prior-year quarter to 85%, enhancing the sustainability of its distributions.

Looking ahead, I expect the REIT to continue benefiting from strong occupancy levels, supported by rising demand for healthcare services driven by an aging population. With liquidity of approximately $250 million at the end of the third quarter, it is well-positioned to pursue selective growth opportunities. Considering these factors, I believe NorthWest can continue to reward shareholders with stable, attractive monthly payouts. At current levels, the REIT offers a forward dividend yield of around 6.50%.

Whitecap Resources

Another monthly dividend stock I am bullish on is Whitecap Resources (TSX:WCP), which currently offers a forward dividend yield of 6.38%. The oil and natural gas producer has significantly strengthened its production and cash-flow profile following the merger with Vener in May 2025. Supported by the integration, Whitecap’s funds flow surged from $409 million in the prior-year quarter to $896.6 million, while free funds flow reached $350.3 million.

The company’s balance sheet has also improved meaningfully, with liquidity of approximately $1.6 billion and a net debt-to-annualized funds flow ratio of just one, highlighting its financial flexibility. In addition, Whitecap continues to enhance its production capabilities through disciplined capital spending, with planned investments of $2 billion in 2025 and between $2.0 billion and $2.1 billion in 2026.

Backed by these investments, management expects average production in 2026 to range between 370,000 and 375,000 barrels of oil equivalent per day, representing a meaningful increase from current levels. This production growth, combined with strong cash generation, should support further improvements in financial performance and enable Whitecap to continue rewarding shareholders with attractive and sustainable monthly dividends.

SmartCentres REIT

SmartCentres REIT (TSX:SRU.UN), which owns and operates 197 properties totaling 35.6 million square feet of income-producing space, is my final pick. Supported by its strategically located portfolio—where nearly 90% of Canadians live within 10 kilometres of a SmartCentres property—and its blue-chip tenant base, the Toronto-based REIT maintains a healthy and stable occupancy rate.

In addition to its core retail assets, SmartCentres continues to expand its self-storage platform, having opened three new facilities last year. The REIT plans to add two more self-storage properties in Quebec in 2026, followed by another two in British Columbia in 2027. Alongside these initiatives, the company is advancing its sizeable 86.2-million-square-foot development pipeline, with approximately 0.8 million square feet currently under construction.

These expansion projects could support long-term earnings and cash-flow growth, enhancing the sustainability of SmartCentres’s distributions. At present, the REIT pays a monthly distribution of $0.1542 per unit, which translates into an attractive forward dividend yield of approximately 6.86%.

COMPANYRECENT PRICENUMBER OF SHARESINVESTMENTDIVIDENDTOTAL PAYOUTFREQUENCYNWH.UN$5.546,016$33,329$0.03$180.5MonthlyWCP$11.442,913$33,325$0.608$177.1MonthlySRU.UN$26.991,235$33,333$0.1542$190.4MonthlyTotal$548.0

The post Generate $500 in Tax-Free Monthly Income With This Easy Strategy appeared first on The Motley Fool Canada.

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More reading

• Passive Income Investors: This TSX Stock Has a 6.5% Dividend Yield With Monthly Payouts
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• 1 Ideal TFSA Stock Paying 7% Income Every Month

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends NorthWest Healthcare Properties Real Estate Investment Trust, SmartCentres Real Estate Investment Trust, and Whitecap Resources. The Motley Fool has a disclosure policy.