A 7% yield can appear like free cash in a Tax Free Financial savings Account (TFSA). That’s why you want skepticism. An enormous payout can construct tax-free revenue quick. It could actually additionally disguise issues till the unit worth does the speaking. So once you spot a sky-high yield, ask one query: What funds the distribution?
If the money comes from sturdy revenue and a portfolio that grows, the yield can compound your TFSA. If it will depend on promoting belongings, leverage, or returning your individual capital, the month-to-month deposit can really feel nice whereas your account worth stalls. You need revenue that provides to wealth, not revenue that simply reshuffles it. I wish to see the web asset worth rising after distributions. So let’s take a look at one dividend inventory to think about.
EIT
Canoe EIT Earnings Fund (TSX:EIT.UN) forces you to suppose this fashion. It’s a closed-end fund that holds a diversified mixture of public securities and targets distributions alongside internet asset worth progress. It pays $0.10 per unit every month, or $1.20 a 12 months. In February 2026, the fund confirmed that payout once more and up to date a particular non-cash distribution tied to year-end tax mechanics, yielding at about 7% at writing.
The final 12 months additionally confirmed this isn’t a plain dividend inventory. In late January 2026, Canoe introduced a $300 million personal placement of Sequence 3 most well-liked items at $25, with a set $1.25 annual most well-liked distribution, and it deliberate to make use of the proceeds inside the fund’s technique. Most well-liked capital can add flexibility, nevertheless it additionally provides obligations forward of frequent unit holders. The fund additionally warns that distributions might embrace return of capital, which may scale back internet asset worth over time.
What has traders excited is the observe report. In its 2024 administration report, EIT delivered a 28% whole return on a market worth foundation and 28.4% on a internet asset worth foundation, forward of the TSX. Over 10 years, the identical report reveals a 13.6% compound return primarily based on market worth. That will not assure something, nevertheless it reveals the fund can generate positive aspects, not simply cheques.
Earnings help
Now take a look at the newest monetary outcomes, which fund that dividend. Now, the dividend inventory doesn’t report the identical as many different shares, as an alternative taking a look at semi-annual outcomes. So, for the six months ended June 30, 2025, EIT.UN reported $33.2 million in dividend revenue and internet positive aspects on investments and derivatives of $194.4 million. It additionally reported a $172.5 million improve in internet belongings attributable to frequent unit holders. Internet asset worth per unit rose to $15.86 at June 30, 2025, from $15.52 at Dec. 31, 2024.
Right here is the nuance TFSA traders should not ignore. In that very same six-month interval, the fund recorded $109.1 million of distributions to frequent unit holders, with $23.6 million coming from dividends and $85.4 million coming from realized positive aspects on gross sales of portfolio belongings. That may work when markets cooperate. It could actually tighten when markets cool, as a result of realized positive aspects are inclined to shrink and reductions to NAV can widen.
Valuation comes all the way down to what you pay versus what you get. As of writing, the dividend inventory affords a 7% dividend yield whereas buying and selling at 7.4 occasions earnings. Nonetheless, the statements additionally describe a margin facility. A reduction to internet asset worth (NAV) can assist, however it could possibly additionally mirror nerves about volatility and the revenue combine behind the payout. For now, although, here’s what even $7,000 can herald with the present annual dividend of
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| EIT.UN | $16.97 | 412 | $1.20 | $494.40 | Month-to-month | $6,991.64 |
Backside line
So, is EIT.UN TFSA dividend inventory decide? It may be, in case you purchase it for whole return first and the yield second. The fund has proven it could possibly develop NAV whereas paying month-to-month money, and it offers you diversification in a single ticker. Nonetheless, deal with the payout in consequence, not a promise. In case you hate worth swings, it will check you. Hold asking the identical query: Is that this yield constructing my TFSA, or simply recycling it?