While you can use the account to hold cash and generate interest income, the low interest rates don’t offer much in the way of returns that you might enjoy. A better way to use the available TFSA contribution room is to build a portfolio of high-quality stocks. If you want to increase your monthly income, you can create a self-directed investment portfolio of monthly dividend paying stocks can be an excellent strategy.
You can reinvest the dividends to accelerate your capital growth through the power of compounding. Likewise, you can withdraw the income you generate from the account and it will remain tax-free.
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Compound returns in a TFSA
When you build a TFSA portfolio, the returns your portfolio generates may not be sufficient right from the start. Initially, it may be better to focus on building the value of your portfolio and increasing its value over time to generate substantial monthly returns. The more shares you own, the greater the monthly return will be. As you approach retirement, even the smallest initial investment can yield significant returns.
By investing in stocks that regularly increase payouts each year, you can increase your returns and reinvest the dividends your investments generate. This way you get a growing income stream from your shares, significantly accelerating your capital growth by the time you need to use the extra income.
Stable and safe investments for a TFSA
The key to success with a TFSA is choosing the right investments for your self-directed monthly income portfolio. In view of this, Granite Industrial Real Estate Investment Trust (TSX:GRT.UN) could be a solid investment to consider.
Granite is a $5.23 billion market capitalization REIT engaged in the acquisition, development, ownership and management of industrial, warehouse and logistics properties in Europe and North America. Investing in Granite Industrial REIT to own units of the trust means you can generate monthly returns from distributions it pays to investors each month.
At the time of writing, Granite Industrial REIT is trading for $86.34 per share and paying investors $0.2958 per month for each share they own. The more you invest, the greater the returns you can generate each month with Granite Industrial REIT.
Granite is a defensive investment due to its high-quality logistics and production properties in Canada, the US and Europe. It has a low-risk balance sheet, high occupancy rates and long-term leases. Combined with a modest and sustainable payout ratio and the fact that payouts have been increasing for 15 years in a row, this is an attractive investment to consider.
Silly takeaway
Granite Industrial REIT offers you the opportunity to generate reliable monthly returns. The shares are held within a TFSA and can provide tax-free income that you can reinvest to increase the value of your investment in the long term. By identifying more high-quality monthly dividend stocks in a TFSA, you can create a sizeable portfolio that can help you achieve your long-term financial goals.
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