Amid the current uncertain economic environment, passive income can play a pivotal role in strengthening long-term financial security by providing a reliable cash flow stream beyond active employment. Among income-generating strategies, investing in high-yield dividend stocks that pay monthly distributions can be an effective way to build a consistent passive-income stream.
Investors can further enhance the tax efficiency of this strategy by holding eligible investments within a Tax-Free Savings Account (TFSA), where investment income and capital gains can generally grow tax-free, subject to available contribution room. For 2026, the annual TFSA contribution limit is $7,000, bringing the cumulative contribution room to $109,000. With this in mind, a $60,000 investment, divided equally between the following two monthly-paying dividend stocks, could generate more than $300 in monthly income. Letâs take a closer look at these two stocks.
SmartCentres Real Estate Investment Trust
SmartCentres Real Estate Investment Trust (TSX:SRU.UN) is an attractive option for income-focused investors, supported by its resilient cash flows and generous distribution yield. The REIT owns and operates 201 strategically located properties across Canada, with a high-quality tenant base. Approximately 95% of its tenants have a regional or national presence, while 80% provide essential services, helping SmartCentres maintain strong occupancy and collection rates across economic cycles.
The REIT could also benefit from steady lease renewals at higher rates and ongoing lease-up activity. With a monthly distribution of $0.15 per unit, SmartCentres currently offers a forward yield of approximately 6.7%.
Looking ahead, strong demand for Canadian retail space, coupled with limited new supply due to elevated construction costs, could support long-term growth. SmartCentres also has approximately 0.6 million square feet of properties under construction, including a 200,000-square-foot Canadian Tire store in Toronto and two self-storage facilities in British Columbia. Furthermore, its development pipeline contains approximately 87 million square feet of potential projects. Given its resilient cash flows and extensive growth pipeline, SmartCentres appears well positioned to sustain its distributions and deliver attractive long-term income.
Peyto Exploration and Development
Another Canadian stock that could appeal to income-focused investors is Peyto Exploration & Development (TSX:PEY), which currently offers an attractive forward dividend yield of approximately 5.7%. The energy producer benefits from low-cost operations, a long-life reserve base, disciplined capital allocation, and an efficient operating model, supporting resilient financial performance across economic and commodity-price cycles. Backed by strong cash generation, Peyto has paid approximately $3.5 billion in dividends since 1998 and currently distributes $0.12 per share monthly.
Looking ahead, elevated oil and natural gas prices amid ongoing geopolitical tensions could provide a favourable backdrop for Peyto. The company plans to invest $450â550 million this year to enhance its production capabilities, including drilling 70â80 net wells and undertaking gathering and plant-debottlenecking projects.
Peytoâs approximately 1.5 billion barrels of oil equivalent in proved and probable reserves provide a substantial inventory of future development opportunities. Management also targets long-term annual production growth of 5â10%, which could support cash-flow generation, capital investments, debt reduction, and sustainable dividend payments. With a healthy net debt-to-EBITDA ratio of 1.1 at the end of the second quarter, Peyto appears well positioned to continue rewarding shareholders with attractive monthly income.
Should you invest $1,000 in Peyto Exploration & Development right now?
Before you buy stock in Peyto Exploration & Development, consider this:
The Motley Fool Canada team has identified what they believe are the top 10 TSX stocks for 2026⦠and Peyto Exploration & Development wasnât one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.
Consider MercadoLibre, which we first recommended on January 8, 2014 … if you invested $1,000 in the âeBay of Latin Americaâ at the time of our recommendation, youâd have over $18,000!*
Now, it’s worth noting Stock Advisor Canada’s total average return is 98%* – a market-crushing outperformance compared to 88%* for the S&P/TSX Composite Index. Don’t miss out on our top 10 stocks, available when you join our mailing list!
#start_btn6 {
background: #0e6d04 none repeat scroll 0 0;
color: #fff;
font-size: 1.2em;
font-family: ‘Montserrat’, sans-serif;
font-weight: 600;
height: auto;
line-height: 1.2em;
margin: 30px 0;
max-width: 350px;
text-align: center;
width: auto;
box-shadow: 0 1px 0 rgba(0, 0, 0, 0.5),
0 1px 0 #fff inset,
0 0 2px rgba(0, 0, 0, 0.2);
border-radius: 5px;
}
#start_btn6 a {
color: #fff;
display: block;
padding: 20px;
padding-right:1em;
padding-left:1em;
}
#start_btn6 a:hover {
background: #FFE300 none repeat scroll 0 0;
color: #000;
}
@media (max-width: 480px) {
div#start_btn6 {
font-size:1.1em;
max-width: 320px;}
}
margin_bottom_5 { margin-bottom:5px;
}
margin_top_10 { margin-top:10px;
}
* Returns as of July 30th, 2026
More reading
- Here’s How I’d Structure $14,000 in a TFSA for Steady Payouts
- Here’s How I’d Turn $25,000 in a TFSA Into $151 a Month
- This 5.7% Dividend Stock Sends You Cash Every Month
- I’d Structure a $14,000 TFSA Like This for Monthly Income for Life
- Here Are 2 High-Yield Dividend Stocks I’d Hold for a Decade
Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.
