Would you like to accumulate a reliable monthly tax-free income stream to supplement your monthly retirement or employment income?
The tax-free savings account, or TFSA, is an extremely valuable tool that’s at our disposal. It gives us the opportunity to generate tax-free income in Canada while allowing flexibility. This makes it an essential account for investors. The cumulative TFSA contribution room today stands at $109,000 for those who were 18 years old as of 2009. For those who weren’t, your TFSA contribution room can be calculated by adding up the annual contribution room for every year since you turned 18.
The first step is to work at maximizing your TFSA contributions so that your balance reaches your cumulative limit. The next step is to invest in the right stocks so that you can maximize your monthly tax-free income.
In this article, I’ll review two monthly dividend stocks to consider for steady and reliable monthly income – and to turn your TFSA into a $300 monthly tax-free income stream.
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Northland Power – yielding 3.4%
In the world of renewable energy, Northland Power Inc. (TSX:NPI) has set itself up as a top global producer that’s diversified across energy sources and geographies. This means that the company has a diversified list of energy producing assets, including clean-burning natural gas, wind, and solar assets. And that its operations are located across the globe in continents such as Asia, Europe, and North America.
Northland Power is yielding a respectable 3.4% today, with strong cash flows and a strong growth outlook. In Northland’s latest quarter, the fourth quarter of 2025, the company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased significantly versus last year. In fact, it rose 25% to $390 million. This was driven by higher production due to strong winds, the Oneida energy storage contribution, and increased demand at natural gas facilities.
In 2026, Northland’s dividend will be supported by continued growth. The company expects adjusted EBITDA to increase 25% to $1.45 to $1.65 billion. Northland is seeing the benefits of rapidly rising electricity demand. The “electricity super-cycle is accelerating” and this is driving Northland to double its capacity by 2030.
I think that this dividend stock’s monthly dividend payments will be a reliable source of tax-free income for TFSA investors for years to come.
Northwest Healthcare Properties (NWH.UN stock) – yielding 6.5%
As an owner and operator of healthcare properties, Northwest Healthcare Properties REIT (TSX:NWH.UN) has the benefit of little turnover, long duration leases, and high occupancy. It also has the benefit of one of the strongest secular trends these days – the aging population.
NWH.UN stock is currently yielding a very generous 6.5%. This yield is backed by a strengthening balance, cash flows, and a positive industry backdrop for healthcare properties. The trust’s most recent quarter highlights these qualities. Same property net operating income increased more than 3%, and adjusted funds from operations (FFO) increased 22% to $29.5 million.
Also, importantly, Northwest Healthcare marked strong improvements in its debt metrics and payout ratio. For example, its AFFO payout ratio was reduced to 75% from 80% in the same period last year. Also, debt fell by 600 basis points, and the company’s weighted average cost of capital fell by 80 basis points.
Looking ahead, now that Northwest’s balance sheet has been strengthened, it’s time for the company to pursue growth again. Keep in mind, Northwest has simplified and focused its strategy. This means that it’s exiting some of its international assets, in favour of North American ones. This will free up capital and reduce its footprint.
Additionally, Northwest has put a normal course issuer bid in place to take advantage of buying back stock when it’s attractively priced, as it is right now.
The bottom line
For TFSA investors looking for monthly tax-free income in Canada, stocks like NWH.UN and NPI are great candidates for your TFSA contribution. The chart above shows how you can generate $300 in monthly income by buying these stocks.