How I’d Structure a $21,000 TFSA for Constant Monthly Income

Many Canadians might feel like the last three years slipped through their fingers. Between high inflation, soaring interest rates, and market volatility, it’s been easy to fall behind on building wealth. That’s exactly why catching up now inside a Tax-Free Savings Account (TFSA) matters so much. It offers a clean slate where every dollar invested can grow and compound tax-free. Then every bit of monthly income you generate stays in your pocket instead of going to the CRA.

For investors who watched costs rise faster than savings, building monthly income in a TFSA is a way to reclaim control, create breathing room in the budget, and finally feel like their money is working for them again. It transforms “I’m behind” into “I’m building something permanent,” turning small, steady contributions into reliable income. This income can support you for decades.

Getting started

Structuring a $21,000 TFSA for constant monthly income starts with embracing the idea of diversification across sectors. It starts with dividend stocks that generate predictable, recurring cash flow. A strong foundation usually comes from industries with built-in stability. The key is to spread the $21,000 across assets that don’t move in the same direction during market turbulence. That way, even if one sector hits a temporary slowdown, the others continue producing steady monthly payouts.

Once the stable base is set, layering in higher-yielding monthly payers gives the portfolio the actual punch needed to create noticeable monthly income. These dividend stocks offer yields that are materially higher than the market average. Yet these stocks still have sustainable payout ratios because they operate in niche markets with reliable rent or interest income. Allocating 30% to 40% of the TFSA increases monthly cash flow without relying on overly risky companies or unsustainable distributions.

Finally, to make the TFSA truly deliver “constant” income, it helps to blend the portfolio so that distributions arrive at different times, smoothing out cash flow. Monthly payers handle most of this automatically, but adding one or two high-quality quarterly dividend stocks such as a bank or telecom can anchor the long-term growth of the tax-free income stream. Reinvesting part of the dividends in the early years accelerates compounding, and by the time you actually need the money, the portfolio is producing a reliable flow of tax-free cash.

Consider TF

Timbercreek Financial (TSX:TF) is a specialty lender focused on providing structured financing to mid-market real estate developers across Canada. It earns predictable interest income backed by high-quality property collateral. The portfolio is concentrated in first mortgages and low loan-to-value positions. This gives it a risk profile that’s more conservative than many high-yield lenders’. For income-focused investors, TF stands out because its business model is literally built on collecting steady payments from borrowers and distributing that cash back to shareholders monthly.

Recent earnings reinforced this stability, with Timbercreek reporting solid net investment income driven by higher effective interest rates and consistent mortgage repayments. Its portfolio continued to perform well despite a tougher real estate environment, with low impairments and disciplined underwriting helping preserve book value. Management noted that originations remained healthy, spreads remained attractive, and the trust’s leverage stayed within conservative targets. The result was a reaffirmed monthly distribution supported by cash flow.

Bottom line

For someone looking to create monthly income inside a $21,000 TFSA, TF is compelling because it offers one of the market’s stronger income profiles. With its monthly payout, disciplined risk management, and a portfolio built around stable, contractual cash flows, an allocation to Timbercreek can turn a TFSA into a reliable passive income generator. In fact, here’s what that $21,000 could bring in from TF alone at writing.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDEND TOTAL ANNUALPAYOUTFREQUENCYTOTAL INVESTMENTTF$6.653157$0.69$2,177.33Monthly$20,991.05

With the right mix of stable contracts, high yet sustainable yields, and diversified income sources, a $21,000 TFSA can turn into a dependable monthly income engine. One that keeps paying regardless of market cycles.

The post How I’d Structure a $21,000 TFSA for Constant Monthly Income appeared first on The Motley Fool Canada.

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More reading

• This 10% Yield Seems Dangerous: Here’s the Safer Alternative I’d Buy Instead 
• 10% Yield: Is Timbercreek Financial Stock a Good Buy?
• Is Timbercreek Financial Stock a Buy for Its 10% Dividend Yield?
• This 10.4% Dividend Stock Pays Cash Every Month
• Are Telus and Timbercreek Financial Stocks a Smart Buy for Canadian Dividend Investors?

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.