Earn $500 Monthly Tax-Free with a TFSA Strategy
Your Tax-Free Savings Account (TFSA) can be an effective tool for generating a steady income without tax implications. By strategically investing in dividend-paying stocks, Canadians have the potential to earn monthly cash flow while optimizing their savings. One noteworthy option is SRU SmartCentres REIT (TSX:SRU.UN), which combines retail space with residential development, catering to both current and future needs.
Overview of SmartCentres REIT
SmartCentres is recognized as one of Canada’s largest fully integrated Real Estate Investment Trusts (REITs), boasting 197 properties and a significant land bank for future projects. As of September 30, 2025, the company reported an impressive 98.6% occupancy rate, which ensures consistent rental income for its investors.
Investment Strategy and Cash Flow
SmartCentres generates revenue by leasing retail spaces within its shopping-center portfolio. As these properties are redeveloped over time, investors benefit from both current cash flows and future growth potential. However, it’s essential to understand that while real estate investments can provide stability, they also come with challenges, including project delays and fluctuating market conditions.
- Current Share Performance: Shares have increased by 8% over the past year, particularly gaining momentum in late 2025.
- Dividends: SmartCentres declared a December 2025 distribution of $0.15417 per unit, leading to an annualized yield of 7%.
- Funds from Operations (FFO): In Q3 2025, FFO per unit stood at $0.59, down from $0.71 the previous year, indicating some volatility.
Future Growth & Development Pipeline
The outlook for SmartCentres appears promising, with 4.6% growth in same-property net operating income excluding anchor tenants. The company has plans for upcoming self-storage facilities, expected to open in 2026 and 2027. If leasing remains robust and costs are effectively managed, these developments could enhance future cash flow.
Achieving Monthly Income Goals with a TFSA
Investors often wonder how to achieve a monthly income of $500 through a TFSA. Below is a breakdown based on the current share price and expected payouts:
| Company | Recent Price | Number of Shares | Dividend | Annual Total Payout | Frequency | Total Investment |
|---|---|---|---|---|---|---|
| SRU.UN | $26.50 | 3,243 | $1.85 | $5,999.55 | Monthly | $85,939.50 |
To reach a monthly income of $500, a significant investment is required. While this figure may seem daunting, viewing it as a gradual target is beneficial. By contributing consistently to your TFSA, you can work towards it one step at a time.
Considerations for Investors
Investing in SmartCentres can be rewarding, provided you focus on long-term growth rather than immediate payouts. While the company currently distributes monthly, having a small cash buffer within your TFSA can allow for flexibility in managing your income streams. Be aware that market conditions can affect share prices, and a high payout ratio may limit future distribution growth.
With careful planning and an eye on market dynamics, building a tax-free income strategy through a TFSA involving SmartCentres can be a valuable financial move. The balance of retail stability and anticipated development growth makes this REIT an attractive option for income-focused investors.
