TFSA Investors: 1 Perfect Monthly Dividend Stock With a 7.7% Yield

What makes a monthly dividend stock look perfect for a Tax-Free Savings Account (TFSA) is not just the yield. It is the mix of steady cash, dependable operations, and enough stability that you do not spend every month wondering whether the payout will survive. A TFSA is a great place for that kind of stock because the income can compound tax free, and monthly payments give investors more chances to reinvest. When the business behind the payout is tied to everyday needs, the case gets even stronger. That’s why today, we’re looking at this solid dividend stock on the TSX today.

SGR

Slate Grocery REIT (TSX:SGR.UN) is exactly what the name suggests: a real estate investment trust (REIT) focused on grocery-anchored retail properties in the United States. Grocery-anchored plazas tend to be more resilient than many other retail formats. People still need food, pharmacies, and everyday essentials, whether the economy is booming or just muddling along. For TFSA investors, that kind of defensive tenant mix can be very appealing.

Over the last year, the REIT has kept the story pretty practical. It completed 1.7 million square feet of total leasing in 2025, with renewal spreads of 14.9% and new leasing spreads of 34.9% above comparable in-place rent. In short, it has been keeping spaces filled and pushing rents higher, which is exactly what you want from a REIT trying to support monthly income. It also sold a non-grocery property in Texas and bought the remaining minority interest in a 10-asset joint-venture portfolio, moves aimed at sharpening the portfolio and improving flexibility.

There is also a balance sheet angle worth looking at. Management said the weighted-average interest rate was 5% at year-end 2025, with 87.8% of debt fixed, and that it refinanced an eight-property portfolio for US$90 million after quarter-end. That does not make the REIT bulletproof, but it does suggest management is trying to keep financing risk from becoming a nasty surprise. For a dividend stock, that kind of boring housekeeping is actually good news.

Into earnings

The earnings side looks solid enough to keep income investors interested. In the fourth quarter of 2025, rental revenue rose 2.9% year over year to US$54.6 million, while net operating income (NOI) increased 1.7% to US$42.2 million. Same-property NOI for the year rose 1.9%, and portfolio occupancy ended 2025 at 94.4%. That is not explosive growth, but it is steady, and steady works just fine when the goal is reliable monthly cash.

Funds from operations held up fairly well, too. Fourth-quarter funds from operations (FFO) came in at US$14.9 million, or US$0.25 per weighted average unit, flat from a year earlier. AFFO was US$11.7 million, or US$0.19 per unit, down a touch from US$0.20. The AFFO payout ratio was 110.8%, which is higher than ideal, so this is not a flawless income story. Still, the FFO payout ratio was a more comfortable 86.9%, which suggests the distribution remains supported by the core business even if the margin for error is not huge.

The valuation is where the case gets more interesting. The REIT holds a market cap of around $915 million and a trailing price-to-earnings (P/E) ratio of around 16.8. That is not bargain-basement cheap, but it also does not look stretched for a grocery-focused REIT with healthy leasing spreads and a stable occupancy profile. The obvious risk is leverage, with debt-to-gross book value at 55.3%, so this is still a name that needs steady execution. But for TFSA investors who want monthly income from a defensive real estate niche, it fits quite well — especially with even $7,000 to create dividend income right away.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTSGR.UN$15.44453$1.18$534.54Monthly$6,994.32

Bottom line

Put it all together, and Slate Grocery REIT makes a strong case as a monthly TFSA stock. It owns the kind of real estate people keep using, it keeps collecting rent, and it keeps sending out monthly cash. It is not risk-free, and the payout coverage is worth watching. But if you want one monthly dividend stock with a decent yield and a business tied to everyday spending, this one looks pretty close to perfect.

The post TFSA Investors: 1 Perfect Monthly Dividend Stock With a 7.7% Yield appeared first on The Motley Fool Canada.

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More reading

• This TFSA Stock Pays 7% and Deposits Cash Like Clockwork
• 3 Worry-Free High-Yield Dividend Plays for 2026
• 5 Canadian Stocks I’d Buy for ‘Instant Income’
• These 2 Canadian REITs Yield at Least 7%, and Here’s What You Need to Check Before You Buy
• TFSA: Invest $20,000 in These 4 Stocks and Get $1,100 in Passive Income

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Slate Grocery REIT. The Motley Fool has a disclosure policy.