Today’s Perfect TFSA Stock: 5% Monthly Income

If there is one thing that would be perfect for an investor’s Tax-Free Savings Account (TFSA), it is a stock that provides consistent monthly payouts. There’s no shortage of monthly dividend-paying stocks, but some of the top real estate investment trusts (REITs) are my favourite picks for monthly and tax-free returns.

Boasting a 5% annualized dividend yield as of this writing, Dream Industrial REIT (TSX:DIR.UN) is one such REIT to consider for your self-directed TFSA portfolio. Dream Industrial REIT owns, manages, and operates a global portfolio of diversified industrial properties across key markets in Canada, Europe, and the U.S.

Its portfolio includes 342 industrial properties across these markets, spanning an estimated 73.6 million square feet. These are well-located properties that include logistics facilities and warehouses that have become increasingly essential to the modern economy.

Why buy Dream Industrial REIT?

Dream Industrial, like other REITs, pays investors monthly distributions based on the number of units or shares each investor owns. In this way, REITs function much like monthly dividend-paying stocks. The more shares of Dream Industrial REIT you own, the more it pays you each month in the form of distributions.

The properties in its portfolio might not be very exciting or glamorous, but they are highly practical. In a world where e-commerce is getting more and more important, businesses facilitating the industry are essential and can become very profitable. Dream Industrial has been seeing the results of tailwinds accordingly.

The first quarter of fiscal 2026 saw Dream Industrial report $62.8 million in net income, up by 32.21% from the same period in the previous year. In the same timeframe, the REIT saw its net rental income increase by 7% and its net operating income from comparative properties increase by 9%. These numbers show that the REIT can still increase rents to grow cash flow despite years of having been in a high-interest-rate environment.

As of this writing, Dream Industrial REIT pays its investors $0.05833 per share each month, or  $0.70 per year, translating to a roughly 5% annualized dividend yield. A hypothetical $10,000 invested in Dream Industrial REIT when it trades for $14.29 per unit can theoretically pay out $489.30 per year in dividends alone. If you hold the shares in a TFSA, you can enjoy those returns without incurring income tax on the dividends.

TickerRecent PriceNumber of SharesAnnualized Dividend Per ShareAmount InvestedFrequencyTotal Annual Dividend Per ShareDIR.UN$14.29699$0.70$9,988.71Monthly$489.30

Foolish takeaway

The payout looks quite reasonable and sustainable compared to the tempting yields offered by many other REITs. The trust has a stronger demand profile due to the nature of the industry it facilitates through its portfolio. Dream Industrial REIT maintains strong occupancy rates and rental collection rates, supporting the high-yielding monthly distribution it offers.

If higher interest rates persist, they will increase the risk of financing costs weighing on the balance sheet. A weaker economy could also drive down leasing demand. Dream Industrial REIT depends on strong industrial demand to maintain a healthy balance sheet. Despite the potential risks, it seems like an excellent investment in the current market environment.

The post Today’s Perfect TFSA Stock: 5% Monthly Income appeared first on The Motley Fool Canada.

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More reading

• My 2 Favourite Stocks for Monthly Passive Income
• The Ideal TFSA Stock: A 5% Yield With Constant Paycheques
• The Hidden Canadian Winners of the Data Centre Boom
• How to Use a TFSA to Generate $363.14 in Monthly Tax-Free Income
• Here’s an Ideal TFSA Dividend Stock That Pays Consistent Cash

Fool contributor Adam Othman 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.