The Ideal TFSA Stock: A 7.5% Yield Paying Constant Cash

Monthly cash inside a Tax-Free Savings Account (TFSA) feels like finding money in your winter coat. It sounds small, then it adds up fast. The key is to pick something you can hold through messy markets, not something that only looks good on a calm day. In 2026, investors still argue about interest rates, and that debate can whip prices around. A steady monthly payer can keep you focused on progress instead of panic. So let’s look at one that matches up on the TSX today.

EIT

Canoe EIT Income Fund (TSX:EIT.UN) suits the monthly-income theme as it aims to deliver a regular distribution while managing a diversified portfolio. It acts like a packaged income strategy. It holds Canadian and U.S. dividend-paying equities and some fixed income, and can use modest leverage through a margin facility. Instead of betting on one company’s cash flow, you tap into dozens of underlying payers in one ticker.

It feels relevant right now because it maintains its routine while sentiment flips. The fund declared a January 2026 cash distribution of $0.10 per unit. That equals $1.20 a year if it holds the pace, therefore creating a 7.5% dividend yield at the time of writing. That monthly rhythm can help TFSA investors who want either automatic reinvestment or dependable cash for goals.

Recent performance has looked steady rather than explosive. The units have traded mostly in the mid-teens through the past year, with shares up about 4%. Investors usually buy EIT.UN for the distribution first, then hope for price support over time. It may also issue units through an at-the-market program, which can affect discounts and long-term returns.

Earnings support

Now to the latest detailed financial numbers the fund reported in its interim statements for the six months ended June 30, 2025. It reported total income of about $200 million and an increase in net assets attributable to common unit holders of about $172.5 million, or $0.95 per unit. Net assets attributable to common unit holders sat around $2.9 billion, and net assets per unit came in at $15.86 at that date. Those results show the portfolio generated meaningful gains and income in that first half.

But the same report also shows why you should not treat the distribution like a guaranteed salary. A large part of the results came from realized gains, and markets control that line item. The fund also pays management fees and interest costs, and leverage can magnify both wins and losses. The fund’s disclosures also note that distributions can include return of capital, which can support today’s cash flow but can pressure net asset value later if returns disappoint.

Valuation for a closed-end income fund does not look like a bank’s valuation, so keep it simple. Compare the unit price to net asset value and watch whether the units trade at a discount or premium. When the market prices the units below the portfolio value, future returns can improve if the gap closes. When the market pushes the units above the portfolio value, you take on more downside risk if sentiment cools.

Bottom line

So why does EIT.UN qualify as an ideal TFSA stock even if you do not obsess over yield? Because it offers a clear monthly cash rhythm, broad diversification, and a straightforward way to reinvest tax-free. Right now, here’s what it could bring in from a $7,000 investment.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTEIT.UN$15.99437$1.20$524.40Monthly$6,990.63

Still, challenge the story before you buy. Return of capital can shrink long-term value, fees can nibble at compounding, and leverage can sting in a downturn. If you size it sensibly and focus on total return, it can turn your TFSA into a calmer wealth builder.

The post The Ideal TFSA Stock: A 7.5% Yield Paying Constant Cash appeared first on The Motley Fool Canada.

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More reading

• Use Your TFSA: Earn $420 Each Month in Tax-Free Income
• How to Use Your TFSA to Earn $420 per Month in Tax-Free Income
• 1 Way to Use a TFSA to Earn $100 in Monthly Income

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.