How to Create Your Own Pension With Dividend Stocks

Dividend investing remains a foundational and sustainable strategy for modern retirement planning. It is fine print not just for seniors, but for anyone years away from retirement.

While the Canada Pension Plan (CPP) and Old Age Security (OAS) provide lifetime benefits, both pensions are partial replacements for pre-retirement income. Because of this reality, dividend investing becomes essential to fill the income gap and ensure a “comfortable” retirement.

Build a personal pension

A “do-it-yourself” or DIY pension must meet basic requirements to truly achieve its purpose. First, a dividend-driven pension is designed to preserve capital. Second, the time frame is long-term—decades if need be. Finally, reinvest all dividend income to take advantage of compounding. The payouts will eventually become pension-like income in retirement. 

However, the most crucial step is selecting the right stocks or income providers for your DIY pension. You look for companies that can be reliable partners for the next 25 or 30 years. Also, dividend safety takes precedence over high dividend yields.

Aim for established businesses with a long dividend track record or a strong history of dividend-growth streaks. Besides ensuring a stable private pension, you have a powerful hedge against inflation.

Big Six advantage

Canada’s banking sector is a bedrock of stability, with the Big Six enjoying a banking oligopoly. National Bank of Canada (TSX:NA), the smallest in the elite circle by market cap, boasts an exceptional history of reliability, too. Performance-wise, NA (+1,131.23%) has outperformed its larger peers over the last two decades.

Only Royal Bank of Canada is the other big bank stock with a total return of +1,000% in 20 years. If you invest today, NA trades at $166.91 per share and pays a 3.02% dividend. With a 146-year dividend track record and roughly 15 consecutive years of annual dividend hikes, it fits a “keep your capital intact” strategy.

The $64 billion bank has strengthened its national presence following its February 2025 acquisition of Canadian Western Bank. Its president and CEO, Laurent Ferreira, said the bank is well-positioned to generate continued growth and superior returns, notwithstanding a complex macro-environment.

In fiscal 2025 (12 months ending October 31, 2025), NA’s net income rose 5% to $5 billion versus fiscal 2024. The bank also announced a 5.1% dividend increase. A $25,000 investment today will compound to $45,631.90 in 20 years (quarterly dividend reinvestment).

High dividend-growth rate

Cogeco Communications (TSX: CCA) appeals to income investors for its 21-year dividend-growth streak and high dividend-growth rate. On January 14, 2026, the $2.8 billion telecommunications company announced a 7% dividend hike.

As of this writing, the share price is $66.21, while the dividend offer is 5.94%. Assuming you invest $25,000 in this 5G stock. The capital will balloon to $81,299.60 in 20 years. According to its president and CEO, Frédéric Perron, the 4.3% and 13.1% year-over-year decline in revenue and profit in the first quarter of fiscal 2026 were in line with expectations. He added that the subscriber metrics during the period were the best in 15 quarters.

Notably, its U.S. (Breezline) and Canadian (Cogeco Connexion) subsidiaries have been merged into one North American unit to increase operational efficiency and speed.

Timeless concept

The concept of building a personal pension through dividend investing is timeless. A diversified portfolio of established dividend stocks creates a self-funding mechanism in retirement.

The post How to Create Your Own Pension With Dividend Stocks appeared first on The Motley Fool Canada.

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More reading

• 2 Workhorse Bank Stocks to Keep Buying in 2026
• Goodbye, GICs: These Dividend Stocks Are a Far Better Buy
• 2 Canadian Bank Stocks to Buy at a Discount
• 7 Top-Tier Canadian Stocks That Just Bumped Up Dividends (Again!)
• 1 TSX Dividend Stock I’ll Buy Over Telus

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Cogeco Communications. The Motley Fool has a disclosure policy.