Power-Up Your TFSA: This TSX-Listed ETF Delivers Monthly Tax-Free Cash Flow

This January, Canadian investors could power up their Tax-Free Savings Accounts (TFSAs) for juicy passive income, paid every month for a cash-rich 2026. If your goal for the new year is to secure outrageously high passive income, you might want to look beyond standard individual dividend stocks into monthly-dividend paying exchange traded funds (ETFs) primed for high payout yields

The Harvest Healthcare Leaders Income ETF (TSX:HHL) is currently offering a compelling proposition: the stability of the global healthcare sector combined with a mouth-watering 9.2% annual yield.

The passive income engine: How the HHL ETF yields 9.2%

At first glance, a yield nearing double digits might seem too good to be true, especially in a sector as stable as healthcare. Typically, a portfolio of healthcare stocks would offer a modest dividend yield of around 1.8%.

However, the HHL ETF is an actively managed fund that employs a “covered call” strategy to supercharge its income. By writing options on its portfolio positions, the fund managers generate additional cash flow to augment the portfolio’s natural dividends. This strategy allows the fund to transform that standard 1.8% yield into a juicy 9.2% annualized distribution.

For income-focused investors, the payout structure is ideal: the ETF pays a monthly distribution of $0.06 per unit. This consistent monthly cash flow makes it a strong contender for those using their TFSA for passive income.

What you are buying

When you buy HHL ETF, you get more than its monthly dividend’s juicy yield; you are buying into a $1.8 billion portfolio of the 20 largest healthcare companies in the United States. This includes giants in big pharma, biotech, life sciences, and healthcare equipment.

This exposure is particularly valuable for Canadian investors because the healthcare sector is significantly underrepresented on the TSX. Some of the large-cap “healthcare” stocks in the S&P/TSX Composite Index are actually retirement residence operators, which arguably belong in the real estate sector. The HHL ETF allows you to diversify into true global healthcare multinationals that are inflation-resistant and benefit from rising global healthcare expenditure.

The cost of owning the monthly dividend ETF is manageable. With a management expense ratio (MER) of 0.98%, investors may incur about $9.80 per year in management expenses on every $1,000 invested. Replicating the ETF’s strategy on your own could cost significantly more, before we consider investments in the required skillset.

Powering up your TFSA: The power of dividend reinvestment

The primary investment thesis for the high-yield HHL ETF is the dividend. In fact, the dividend is arguably the most important part of owning this monthly dividend ETF.

Data shows that since the fund’s inception in 2016, a $10,000 investment could have grown into a $23,400 position today. However, this growth is largely driven by dividend reinvestment. Without reinvesting those monthly payouts, the capital value alone might have stagnated at around $9,700 over the same period.

HHL data by YCharts

As of December 31, 2025, the ETF boasted a five-year average annual return of 9%. This creates a clear path for wealth creation: use the high yield to reinvest and grow your capital position whenever you can.

The Foolish bottom line

Generating a 9.2% yield in an individual portfolio is incredibly challenging, especially within the contribution limits of a TFSA. With a management fee of 0.85% and a Management Expense Ratio (MER) of 0.98%, the HHL ETF provides a professionally managed, diversified solution to that problem.

If you are looking to boost your income in 2026, adding the largest Canadian healthcare-focused ETF to your watchlist today is a smart move.

The post Power-Up Your TFSA: This TSX-Listed ETF Delivers Monthly Tax-Free Cash Flow appeared first on The Motley Fool Canada.

Should you invest $1,000 in Harvest Healthcare Leaders Income ETF right now?

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* Returns as of January 15th, 2026

More reading

• Got $10,000? Should You Invest in an RRSP or TFSA
• CIBC: Buy, Sell, or Hold in 2026?
• Top Canadian Stocks to Buy With $7,000 in 2026
• Here’s the Average Canadian TFSA at Age 40
• What is the TFSA Contribution Limit for 2026

Fool contributor Brian Paradza 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.