The average Canada Pension Plan (CPP) payout for Canadians retiring at age 65 is around $848.30 per month in July 2025, and it can go up to $1,433, which is rare. Although the payout amount is significant, it is not sufficient to meet daily expenses. Not only retirees but also those who are retiring in Canada in the next 10 or 15 years should start working towards building a passive income source that can supplement their CPP.
How much should you invest to build a CPP supplement
The CRA has a well-crafted CPP structure. You invest 11.9% of your maximum annual pension earnings in CPP after adding employee and employer contributions.
This is the first phase of CPP contribution. So if your pension earnings in 2026 are $74,600 and you deduct $3,000 as a basic exemption, you contribute $8,460 throughout the year in 12 monthly installments. This amount keeps increasing annually.
Now with CPP, you do not have control over where your contribution is invested. However, you can control the investment in the CPP supplement portfolio and aim to get a $1,000 monthly passive income.
How to earn a $1,000/month dividend from a $100,000 investment today
Once your end goal is in place, it is time to reverse engineer and plan the monthly yield you will need to secure $1,000 per month or $12,000 a year. At a 6% yield, you will need to invest $200,000 to earn $12,000 per year, and this amount halves at a 12% yield.
| Invested Amount | Annual Dividend Yield | Annual Dividend |
| $200,000 | 6% | $12,000 |
| $150,000 | 8% | $12,000 |
| $120,000 | 10% | $12,000 |
| $100,000 | 12% | $12,000 |
The average dividend yield of a Canadian stock is 6%. However, you can earn up to 12% yield by investing a higher amount when the stock price falls to lock in a higher yield. For instance, Telus Corporation (TSX:T) stock is trading at a 52-week low that has inflated its yield to 8.9%. The company grows its dividend annually and also offers a dividend reinvestment plan. The earlier investment you made benefits from dividend growth, and your yield increases.
For instance, $10,000 invested in Telus in January 2016 bought you 522 shares, which paid $470 at that time. Today, those shares are paying $855, increasing the yield on $10,000 from 4.7% to 8.5% in 10 years. If you invest a lump sum amount now in Telus, you can lock in a higher yield than what 10 years of dividend growth has achieved. This 8.9% yield could increase to 12% in 10 years if the company continues to grow dividends by 4%.
| Year | Telus Dividend per Share (4% CAGR) | Dividend Income From 522 Shares | Annual Dividend Yield |
| 2025 | $1.6372 | ||
| 2026 | $1.7027 | $888.80 | 8.9% |
| 2027 | $1.7708 | $924.36 | 9.2% |
| 2028 | $1.8416 | $961.33 | 9.6% |
| 2029 | $1.9153 | $999.78 | 10.0% |
| 2030 | $1.9919 | $1,039.77 | 10.4% |
| 2031 | $2.0716 | $1,081.36 | 10.8% |
| 2032 | $2.1544 | $1,124.62 | 11.2% |
| 2033 | $2.2406 | $1,169.60 | 11.7% |
| 2034 | $2.3302 | $1,216.39 | 12.2% |
One method is to invest $100,000 today in stocks like Telus and reach the $1,000/month target in 10 years.
How to earn $1,000/month in dividends from an $8,460 investment today
Another method is to invest a similar amount as the CPP contribution in dividend growth shares over the years. The 2026 CPP contribution is $8,460, which increases at an average annual rate of 5%. If you increase your annual investment in the supplement CPP portfolio, your invested amount will be $200,000 in 16 years.
When you invest over the years, select stocks where you can lock in at least a 6% dividend yield. A trade-off for lower yield would be dividend growth. For 2025, you could consider investing your supplement CPP contribution in Canadian Natural Resources (TSX:CNQ). The stock is offering a 5% yield, but it has grown its dividends at an average annual rate of 21% in the last 15 years. Even if the growth rate slows to 10%, the growth can fill in for the lower yield in the future.
In January 2016, a $10,000 investment would have bought you 740 shares of Canadian Natural Resources that paid $347.80 in dividends in that year, or a 3.5% yield. Those shares are now earning $1,739 in 2025 dividends, increasing the yield on the initial $10,000 to 17.4%.
