Today’s Perfect TFSA Stock: 3.3% Monthly Income

A 3.3% monthly dividend may not grab investors as quickly as a 6% yield, but it may tell a better Tax-Free Savings Account (TFSA) story.

That sounds odd at first. Many income investors want the biggest yield they can find, especially when everyday costs keep climbing. Statistics Canada reported that the Consumer Price Index rose 3.2% year over year in May, while food purchased from stores rose 4.3%. Grocery inflation has now outpaced headline inflation for 16 straight months.

So, yes, income still matters. Monthly income can feel especially useful inside a TFSA. A monthly dividend can help retirees match cash flow with regular expenses. Younger investors can also reinvest those payments more often, buying more shares without creating taxable income inside the account.

However, a weak income stock can waste valuable tax-free space. The goal should not be chasing the biggest payout. It should be owning businesses that can pay investors, grow over time, and avoid putting the dividend under constant pressure.

Northland Power (TSX:NPI) now falls right into that category.

NPI

NPI stock is a Canadian power producer with assets across offshore wind, onshore renewables, solar, natural gas, battery storage, and regulated utility operations. The company gives investors exposure to electricity demand, renewable power, and long-life energy infrastructure.

NPI stock reduced its common dividend from $0.10 per month through most of 2025 to $0.06 per month beginning with the December 2025 record date. At writing, it now produces a $0.72 annual dividend, currently yielding 3.3%. For investors who owned the stock mainly for high income, the cut hurt. For new investors, it creates a different setup.

The lower payout gives NPI stock more room to manage capital while it works through a construction-heavy period. That’s important for a company with two major offshore wind projects moving toward completion.

Into earnings

In the first quarter of 2026, NPI stock advanced the 1.1-gigawatt (GW) Baltic Power project in Poland and the one GW Hai Long project in Taiwan. Baltic Power should reach commercial operations in the second half of 2026, while Hai Long remains on track for 2027.

If they enter operation as planned, these could support stronger future cash flow. NPI stock also secured a 30-year corporate power-purchase agreement for the balance of Hai Long’s production, which would leave the project fully contracted once conditions are completed.

Latest results show a stronger company aiming for more strength. NPI stock reported first-quarter 2026 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $427 million, up from $361 million a year earlier. Management also maintained its 2026 free cash flow per share outlook of $1.05 to $1.25. So, even if Northland reaches the low end of its free cash flow per share guidance, the payout looks more manageable than it did before the reset.

Looking ahead

The risk is execution. NPI stock still depends on construction timelines, financing costs, interest rates, wind resources, power prices, foreign exchange, and offshore wind performance. The company also needs to rebuild investor trust after reducing the dividend. TFSA investors should not treat this as a guaranteed monthly-income machine.

Still, NPI stock has a better story than the old high-yield headline suggests. NPI stock is no longer a 6% monthly-income stock on its common shares. It is a reset power stock with a more conservative monthly dividend, major projects nearing completion, and exposure to long-term electricity demand. That may be a healthier setup.

Bottom line

A strong TFSA income stock does not need the biggest yield on the board. It needs a dividend that can survive, a business that can grow, and a path to stronger returns over time. NPI stock is not perfect, but after its reset, it may be more interesting than many income investors realize.

The post Today’s Perfect TFSA Stock: 3.3% Monthly Income appeared first on The Motley Fool Canada.

Should you invest $1,000 in Northland Power right now?

Before you buy stock in Northland Power, consider this:

The Motley Fool Canada team has identified what they believe are the top 10 TSX stocks for 2026… and Northland Power wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 … if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have over $17,000!*

Now, it’s worth noting Stock Advisor Canada’s total average return is 97%* – a market-crushing outperformance compared to 88%* for the S&P/TSX Composite Index. Don’t miss out on our top 10 stocks, available when you join our mailing list!

Get the 10 stocks instantly #start_btn6 { background: #0e6d04 none repeat scroll 0 0; color: #fff; font-size: 1.2em; font-family: 'Montserrat', sans-serif; font-weight: 600; height: auto; line-height: 1.2em; margin: 30px 0; max-width: 350px; text-align: center; width: auto; box-shadow: 0 1px 0 rgba(0, 0, 0, 0.5), 0 1px 0 #fff inset, 0 0 2px rgba(0, 0, 0, 0.2); border-radius: 5px; } #start_btn6 a { color: #fff; display: block; padding: 20px; padding-right:1em; padding-left:1em; } #start_btn6 a:hover { background: #FFE300 none repeat scroll 0 0; color: #000; } @media (max-width: 480px) { div#start_btn6 { font-size:1.1em; max-width: 320px;} } margin_bottom_5 { margin-bottom:5px; } margin_top_10 { margin-top:10px; }

* Returns as of July 6th, 2026

More reading

• 4 Dividend Stocks to Buy and Hold for the Next 4 Years
• 3 Canadian Infrastructure Stocks Built for the Electrification Wave
• 2 Canadian Energy Stocks That Still Look Cheap Today
• 2 Canadian Stocks That Could Quietly Profit From Data Centre Expansion
• Undervalued Canadian Stocks to Consider Now

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.