This Perfect TFSA Stock Yields 5.3% Annually and Pays Cash Every Single Month

Investors seeking tax-free passive income every single month could use the Tax-Free Savings Account (TFSA) to invest in dividend stocks. A TFSA allows dividend income to compound or be withdrawn without triggering any tax liability, making it a powerful tool for income-focused portfolios.

The key is to invest in companies with strong balance sheets, resilient cash flows, and a proven history of paying and sustaining dividends. When these fundamentals are in place, dividends are more likely to remain stable even during uncertain market conditions.

Against this backdrop, here is a perfect TFSA stock that yields 5.3% annually and pays cash every single month.

A 5.3% monthly dividend stock

For TFSA investors seeking monthly income, Dream Industrial REIT (TSX: DIR.UN) is a compelling option. The real estate investment trust (REIT) operates industrial real estate, with a diversified portfolio of modern logistics and distribution properties located in key urban markets. This broad exposure helps reduce risk, as no single industry accounts for more than 18% of annualized gross rental income.

As of September 30, 2025, the REIT held an interest in and managed 340 assets comprising 552 buildings located across Canada, Europe, and the U.S. Its tenant base is well diversified, with 1,465 tenants across the portfolio. This breadth helps ensure steady revenue while limiting the financial impact should any individual tenant vacate or reduce its space.

The REIT’s monthly payouts are supported by its solid operating performance led by strong leasing momentum, which drives its occupancy and rental spread. Thanks to the higher occupancy rate and a growing rental income, Dream Industrial REIT generates strong comparative properties’ net operating income (NOI) and funds from operations (FFO), supporting its distributions over time.

Dream Industrial REIT pays a monthly dividend of $0.058 per unit, yielding approximately 5.3% annually.

Earn $116 per month in tax-free income

Dream Industrial REIT is well-positioned to sustain its monthly distribution, supported by strong leasing momentum across its portfolio, including recently completed development projects.

As of the end of the third quarter of 2025, Dream Industrial REIT reported healthy occupancy of 95.4% across its wholly owned and managed portfolio. Leasing activity remains robust, with management actively engaged in discussions with prospective tenants.

Rental growth has already been a notable driver of performance this year. In Canada, average in-place and committed rents increased by 9.3% from the start of the year to September 30, 2025. Further, the REIT has taken a disciplined approach to embedding contractual annual rent escalators into its leases. This strategy has resulted in steadily growing same-property NOI on a constant-currency basis. In Europe, the income profile is even more inflation-resilient, with roughly 85% of leases indexed to local consumer price indices and the balance featuring predefined rent step-ups.

Dream Industrial REIT also continues to invest in value-add initiatives to enhance cash flow and diversify income sources. These initiatives include installing solar energy systems, EV charging infrastructure, and cell towers across select properties. Such investments are likely to generate incremental revenue and support its payouts.

Strong occupancy, rising rents, embedded contractual growth, and ongoing value-add investments position it well to sustain its payouts. The table below shows that owning 2,000 shares of Dream Industrial REIT would generate approximately $116 in tax-free income each month.

CompanyRecent PriceNumber of SharesDividendTotal PayoutsFrequencyDream Industrial REIT$13.222,000$0.058$116MonthlyPrice as of 01/12/2026

The post This Perfect TFSA Stock Yields 5.3% Annually and Pays Cash Every Single Month appeared first on The Motley Fool Canada.

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* Returns as of January 5th, 2026

More reading

• 2 Top TSX Stocks for Reliable Monthly Income
• 3 Top Canadian REITs for Monthly Income in 2026
• To Get More Yield From Your Savings, Consider These 3 Top Stocks
• Balance Is Everything, and These 3 TSX Stocks Are Top-Tier Picks for 2026
• 2 Top TSX Stocks for Reliable Monthly Income

Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Dream Industrial Real Estate Investment Trust. The Motley Fool has a disclosure policy.