One of the biggest advantages a Tax-Free Savings Account (TFSA) gives you is the ability to earn investment income completely tax-free. That benefit becomes even more powerful when you own investments that generate regular cash flow, allowing you to reinvest distributions or supplement your income without worrying about taxes on the gains.
For TFSA investors seeking consistent monthly payments, some fundamentally solid real estate investment trusts (REITs) could be really appealing. One such REIT that currently offers a dividend yield of above 5% is H&R Real Estate Investment Trust (TSX:HR.UN). Its diversified portfolio, improving financial position, and appealing monthly payouts make it a compelling option for TFSA investors looking to build wealth over time.
Let’s take a deeper dive and understand why this monthly dividend stock looks like a perfect TFSA investment today.
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A diversified real estate portfolio
Simply put, H&R REIT is one of Canada’s largest real estate investment trusts, with properties across residential, industrial, office, and retail sectors. That mix helps spread risk and provides exposure to different parts of the real estate sector.
As of June 3, its stock traded at $10.37 per share, giving the trust a market capitalization of roughly $2.7 billion. While the stock has gained nearly 5% over the two months, it currently offers an annualized dividend yield of 5.8%, paid monthly — making it especially attractive for investors seeking regular passive income within a TFSA.
Strengthening the balance sheet
In recent years, H&R REIT has increased its focus on simplifying the business and improving its balance sheet. During the first quarter, the trust completed $1.5 billion in retail and office property sales as part of its strategy to dispose of non-core assets. These transactions helped it reduce debt and improve liquidity, leaving the company with cash and cash equivalents of $68.5 million and an additional $897 million available through unused credit facilities.
The benefits of these efforts are already showing up in the latest numbers. At the end of the March 2026 quarter, H&R’s total assets stood at $8.1 billion, while its debt-to-total-assets ratio improved to 31.7% from 38.4% in the prior quarter.
The trust also strengthened its leverage profile as its debt-to-adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio declined to 7.0 times from 9.3 times, reflecting healthy progress in reducing financial risk.
Operational performance remains solid
Beyond these efforts to improve its financial position, H&R REIT is continuing to generate stable cash flow from its property portfolio. For the recent quarter, its rental revenue from investment properties reached $184.3 million, while net operating income (NOI) totalled $85.9 million. Similarly, its same-property NOI on a cash basis came in at $90.1 million, highlighting the resilience of the trust’s underlying operations.
At the same time, H&R is working to improve efficiency in its residential segment by partnering with Greystar Real Estate Partners to manage Lantower Residential properties. This move is expected to generate annual cost savings of about US$5 million while improving operating efficiency across its residential portfolio.
A strategy built for long-term growth
In the years to come, H&R REIT’s focus on high-quality residential and industrial properties could support growth. These sectors have generally showcased stronger long-term demand trends than many traditional office and retail properties.
The trust’s ongoing repositioning strategy continues to strengthen the portfolio while improving financial flexibility. Management’s disciplined execution has helped accelerate debt reduction and position the REIT for future opportunities.
Given all these positive factors, H&R REIT’s 5.8% dividend yield and ongoing transformation make it a compelling option to consider, especially for TFSA investors seeking dependable monthly income coupled with long-term growth potential.
