How to Create Your Own Pension With Canadian Dividend Stocks

Given their dependable cash flows, visible growth pipeline, and attractive yield, these two Canadian stocks are ideal for income-seeking investors.

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Key Points
  • Supplementing retirement income with high-yield dividend stocks like Enbridge and Bank of Nova Scotia can provide a reliable stream of passive income, especially when invested through a TFSA for tax-free benefits.
  • Enbridge's stable cash flows and long history of dividend growth, alongside Bank of Nova Scotia's diversification and strategic growth initiatives, make them compelling choices for income-focused investors seeking dependable returns.

According to recent estimates, the average monthly Canada Pension Plan (CPP) and Old Age Security (OAS) benefits total approximately $1,668. While these government benefits help support retirees, they may not fully cover day-to-day expenses amid persistent inflation and rising living costs.

One effective way to supplement retirement income is to invest in high-yield dividend stocks, which offer a reliable stream of passive income and opportunities for capital appreciation over time. Meanwhile, investors can further enhance their return potential by making these investments through their Tax-Free Savings Account (TFSA), thereby earning tax-free dividend income and capital gains.

With that in mind, here are two high-yield Canadian stocks that I believe can help generate reliable passive income for income-focused investors.

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Enbridge

Enbridge (TSX: ENB) is an attractive investment for income-seeking investors thanks to its resilient business model, impressive dividend track record, and healthy yield. The energy infrastructure company generates approximately 98% of its earnings from regulated assets and long-term take-or-pay contracts, with about 80% of those earnings protected by inflation-indexed mechanisms. This structure helps insulate its financial performance from commodity price fluctuations and broader economic volatility, thereby supporting stable, predictable cash flows.

Backed by these reliable cash flows, Enbridge has maintained uninterrupted dividend payments for more than seven decades and has also raised its dividend for 31 consecutive years. As of Tuesday’s closing price, the stock offered a forward dividend yield of 5%.

Looking ahead, Enbridge could be well-positioned to benefit from rising oil and natural gas production across North America, which continues to drive demand for its infrastructure network. The company is advancing its $40 billion secured capital program, with projects scheduled to enter service through the end of the decade. These investments are expected to support steady financial growth, with management forecasting annualized growth of approximately 5% in both adjusted earnings per share (EPS) and distributable cash flow per share through 2030.

In addition, Enbridge expects to return $40–$45 billion to shareholders over the next five years through a combination of dividends and share repurchases. Given its dependable cash flows, visible growth pipeline, and attractive yield, I believe Enbridge remains an excellent choice for income-focused investors.

Bank of Nova Scotia

Another dividend stock that can provide a reliable stream of passive income is Bank of Nova Scotia (TSX: BNS). As one of Canada’s largest financial institutions, the bank offers a broad range of banking, wealth management, and capital markets services across multiple countries. This diversified business mix generates stable cash flows and has enabled BNS to pay dividends uninterruptedly since 1833. The stock currently offers an attractive forward dividend yield of 3.8%.

Looking ahead, BNS focuses on enhancing profitability by expanding its higher-return North American operations while streamlining its exposure to select Latin American markets. The bank is also working to optimize capital allocation and improve operational efficiency across its business. As part of this strategy, it has announced plans to acquire the remaining shares of Scotia Group Jamaica Limited that it does not already own in a transaction valued at approximately $0.5 billion, which the bank expects to close by the end of this year.

In addition, BNS continues to return capital to shareholders through its share repurchase program, which authorizes the buyback of up to 15 million shares through April 2027. The bank could also benefit from a relatively elevated interest-rate environment, which supports lending profitability through healthy net interest margins. Given its reliable business model, strong capital position, strategic growth initiatives, and long history of dividend payments, I believe BNS is an attractive option for income-focused investors.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Bank of Nova Scotia and Enbridge. The Motley Fool has a disclosure policy.

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