Building a diversified portfolio that can provide monthly dividend payments requires picking the right investments, having capital to invest, and some patience.
Fortunately, if investors do look to add one or more of those monthly dividend stocks, there are more than a few great candidates to choose from, but first, let’s talk about the Tax-Free Savings Account (TFSA).
Passive income powered by your TFSA
Picking the right investments is not the only step in building that monthly dividend income. It’s also about where to store those investments. And that’s where the beauty of the TFSA comes into play.
In short, the TFSA is a special type of account that allows investors to deposit after-tax contributions up to a set amount ($7,000 in 2025). Those contributions can then be directed to any manner of investments.
Best of all, unlike a Registered Retirement Savings Plan, TFSA withdrawals are tax-free (and that includes the dividends, capital gains, and interest).
How would you generate a cool $500/month in monthly dividend income from your TFSA?
For that, let’s look at two stellar real estate investment trusts (REITs) that pay out monthly.
Option #1: RioCan REIT
RioCan (TSX:REI.UN) is one of Canada’s largest REITs, with a portfolio of retail and mixed-use residential properties. Historically, RioCan has focused on the retail side of the market, owning strips with anchor tenants for commercial retail.
In recent years, there’s been a shift toward more mixed-use residential properties, offering a unique opportunity for investors.
Those mixed-use properties are located along high-traffic corridors, comprising residential towers that sit atop several floors of retail. This provides the best of both worlds, and the properties are in metro markets along high-traffic transit corridors.
This means that prospective investors who consider RioCan can earn a monthly dividend income, much like a landlord who collects rent each month. As of the time of writing, the yield on that monthly distribution is an attractive 6.14%.
This means that investors who can drop $45,000 into their TFSA will begin earning approximately $235 each month. That fact alone makes this a solid investment to earn monthly dividend income with zero landlord headaches.
And best of all, that investment comes without the headaches of owning a rental property, such as maintenance, property taxes, down payments and finding tenants.
Option #2: Slate Grocery REIT
The best investments are those that provide a necessary service that we interact with daily, yet often dismiss as investments. Grocers are perfect examples of this, and Slate Grocery REIT (TSX:SGR.UN) is another monthly dividend option for investors to consider.
Slate is a U.S.-anchored grocery REIT. The company boasts a whopping 110 properties located across the U.S. in metro markets. Those properties generate a reliable revenue stream and often include secondary tenants beyond any grocery-anchor tenants.
Those secondary tenants are the banks, restaurants and medical offices that are often located next to the anchor property. In the grand scheme, it’s another welcome source of revenue for Slate.
Turning to income, Slate’s monthly distribution is one of the best dividend yields on the market. As of the time of writing, the yield is a staggering 8.19%. Given the same $45,000 investment, investors can expect to earn a cool $310 each month from that investment.
As far as monthly dividend income options, Slate is hard to ignore.
Monthly dividend income: Your $500/month blueprint
Investing $45,000 in both RioCan and Slate could generate a juicy monthly dividend income of over $500. Here is how that mix pans out:
Combined, they provide an income of $6,529.01, or $544.08 each month.
REITs like RioCan and Slate Grocery offer a simple, hands-off way to turn your TFSA into a monthly dividend income engine. With strong yields, defensive appeal, and consistent distributions, they are ideal for long-term investors seeking lifetime income.
