If you’re retired and looking to generate reliable passive income from your TFSA, Choice Properties REIT (TSX: CHP.UN) is easily one of the top Canadian stocks to consider.
Choice currently offers an annual yield of roughly 5.2% and pays its distribution monthly, making it especially appealing if you’re looking to supplement your retirement income.
However, while an attractive yield and monthly payments are certainly useful, what makes Choice such a high-quality investment is the business behind those payments.
After all, when you’re relying on your investments to help cover your expenses, you want to own businesses that can consistently generate cash, even when the economy weakens.
And with Choice owning a massive portfolio of properties across Canada, including grocery stores, pharmacies and industrial buildings, that’s exactly why it’s worth considering for your TFSA.
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A highly defensive Canadian real estate stock
One of the biggest reasons Choice is such a reliable income investment is its relationship with Loblaw, its largest tenant.
Plus, both Choice and Loblaw are controlled by George Weston, which benefits from both businesses doing well and has a long-term interest in keeping their relationship strong and mutually beneficial.
In fact, Loblaw accounts for roughly 57% of Choice’s rental revenue. That gives Choice significant exposure to grocery stores and pharmacies, where demand tends to remain resilient regardless of how the economy is performing.
Because even when Canadians cut back on spending, they still need to buy food and fill prescriptions. That helps support its tenants’ businesses and their ability to keep paying rent.
Furthermore, Choice’s grocery-anchored properties can also be attractive locations for other retailers, which benefit from having those essential stores bring customers to the area.
That demand helps explain why Choice’s portfolio was 97.7% occupied at the end of the second quarter.
Plus, its existing leases also give it opportunities to keep growing its rental income. For example, Choice recently renewed 50 leases with Loblaw, extending them by an average of five years, with rents averaging 8.8% above the expiring rates.
That shows exactly how those properties continue generating income for years while allowing Choice to collect more rent from assets it already owns.
Why Choice Properties is an ideal TFSA stock for retirees
That consistent rental income is what allows Choice to pay its monthly distribution while continuing to invest in its properties.
In fact, through the first half of 2026, Choice paid out roughly 84% of its adjusted funds from operations, a measure that accounts for the cost of maintaining and leasing its properties.
The ratio was closer to 90% in the second quarter, with management pointing to the timing of spending on maintenance and tenant improvements. So, although the distribution remains covered, keeping that payout manageable is important.
Choice also maintains investment-grade credit ratings, which help support its access to financing as it refinances debt and invests in growth, another reason you can have confidence owning the stock for the long haul.
Furthermore, holding Choice in a TFSA allows you to collect that monthly income tax-free and withdraw it whenever you need it. Those withdrawals also won’t increase the income used to calculate federal benefits such as Old Age Security.
That can make a meaningful difference in retirement, allowing you to supplement your income without creating an additional tax bill or reducing those benefits.
And while Choice’s distribution growth has been modest recently, it announced its fourth consecutive annual increase earlier this year.
Plus, with opportunities to raise rents, expand existing retail properties and develop additional industrial space, Choice can continue growing the cash flow its portfolio generates, helping support further distribution increases over the long haul.
