The Perfect TFSA Stock: A 7% Yield With Monthly Paycheques

Monthly income inside a Tax-Free Savings Account (TFSA) is the investing equivalent of finding $5 inside your coat pocket. Sure, it’s yours, but you weren’t exactly expecting it. It’s not life-changing on day one, but still deeply satisfying. A steady cash deposit can help investors build confidence, reinvest more often, and turn a TFSA from a sleepy account into something that actually does work.

The TFSA adds the best part. The Canada Revenue Agency (CRA) says contributions are not tax-deductible, but income earned inside the account, including investment income and capital gains, is generally tax-free, even when withdrawn. That makes the TFSA a strong home for income-producing investments, especially for investors who want cash flow without adding to taxable income.

The key is not chasing the biggest yield on the board. A giant payout can look exciting right up until it gets cut. The better question is whether the business can keep generating the cash needed to support its payments. That brings us to Slate Grocery REIT (TSX:SGR.UN).

Slate

Slate REIT is not a regular stock, but a real estate investment trust (REIT) focused on U.S. grocery-anchored properties. In short, it owns shopping centres built around stores people still visit when the economy gets weird. Groceries do not become optional just because interest rates put a strain on your wallet.

That is what makes the REIT interesting for TFSA income investors. Slate REIT owns necessity-based retail real estate, and its tenants serve everyday spending needs. Investors are therefore betting on people continuing to buy food, household goods, and essentials.

The monthly paycheque angle is real. Slate Grocery’s distribution table shows monthly payments of about $1.22 per unit through 2026. That puts Slate REIT’s forward yield around 6.9% at writing. Yet investors should not clap too loudly just yet. A higher yield can signal opportunity, but it can also signal concern. Income investing loves a good bargain. It does not love a trap wearing a nice hat.

Numbers don’t lie

The latest results reveal both the appeal and caution. Slate REIT reported funds from operations (FFO) per weighted average unit of US$0.25 in the first quarter of 2026, while its FFO payout ratio was 86.2%. That is the cleaner income metric to watch, since REIT investors often use funds from operations to judge distribution coverage.

The tougher number is adjusted FFO. Slate Grocery’s AFFO payout ratio reached 111.9% in the same quarter, up from 104.7% a year earlier. That means the distribution looked stretched on an adjusted funds from operations basis. Investors should not ignore that. Monthly income only works if the business can keep supporting it.

Even so, a $10,000 TFSA investment at a 6.9% yield would generate roughly $690 a year, or about $57.50 a month. Sure, that won’t pay the mortgage, but it could cover a utility bill, part of the grocery bill, or simply be reinvested in more units each month.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTSGR.UN$17.66566$1.22$690.52Monthly$9,993.56

Considerations

The portfolio still has defensive qualities. Slate Grocery reported total assets of about US$2.4 billion at the end of March 2026, and its grocery-anchored focus gives it exposure to tenants tied to daily needs rather than discretionary splurges.

The risk is clear. A high yield, elevated AFFO payout ratio, U.S. real estate exposure, and interest-rate pressure all deserve respect. Currency moves also affect Canadian investors, since Slate Grocery declares distributions in U.S. dollars before conversion.

Still, Slate Grocery can suit TFSA investors who understand the trade-off. It offers monthly cash, a near-7% yield, and exposure to necessity-based real estate.

Bottom line

For investors building TFSA income, Slate REIT deserves a spot on the watch list. A pullback, improving AFFO coverage, or lower interest-rate pressure could make those monthly paycheques look even more attractive.

The post The Perfect TFSA Stock: A 7% Yield With Monthly Paycheques appeared first on The Motley Fool Canada.

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More reading

• A Simple Way to Turn $25,000 in TFSA Savings Into Consistent Cash Flow
• How to Build a Paycheque Portfolio With 2 Stocks That Pay Monthly
• This 7% Monthly Dividend Stock Wants to Prove It’s More Than Just a High Yield
• 2 High-Yield Dividend Stocks to Own for Another 10 Years
• This TSX Stock Pays a 0.57% Dividend Every Single Month

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.