How Dividends, CPP and OAS Can Fit Together in Retirement

Picture Margaret, a 65-year-old Canadian retiree.

Her first Canada Pension Plan (CPP) and Old Age Security (OAS) deposits arrive in the same week. She adds them up at the kitchen table and compares the income to her groceries, car insurance, and other expenses.

The math barely works, which is not inspiring for someone who could spend more than 25 years in retirement. The good news is that a third income stream can easily supplement the CPP and OAS for most Canadian retirees.

How much do CPP and OAS pay in 2026?

The maximum CPP pension for someone starting at 65 in 2026 is $1,507.65 a month, according to the Government of Canada. But the average new retiree in July 2026 received just $858.34.

OAS is simpler. For October to December 2026, it pays up to $762.50 a month for seniors aged 65 to 74 and $838.75 for those 75 and older, according to a Daily Hive report.

Add Margaret’s average CPP to her OAS, and she gets about $1,621 a month, or $19,450 a year, before tax.

How dividend stocks can fill the retirement income gap

A good dividend stock pays you each quarter. Moreover, the best dividend stocks consistently raise payouts, which increases yield-at-cost over time.  

Say you invest $200,000 in a dividend stock that pays a 5% yield. Here, the shareholder earns $10,000 a year via dividends. Now, if the dividend grows by 7% each year, the payout will double over the next decade.

The key strategy is to identify quality companies that generate cash flows across market cycles.  

Is Brookfield Asset Management a good dividend stock for retirees?

Brookfield Asset Management (TSX: BAM) is a useful example of a top dividend stock.

The company manages money for pension funds, insurers, and wealthy individuals. It invests capital in renewable power, infrastructure, real estate, private equity, and credit. In return, it collects recurring management fees.

That steady fee stream lets BAM pay out most of what it earns. Its quarterly dividend is US$0.50 per share after a 15% increase announced in February 2026. At current prices, that works out to a yield of roughly 4.7%.

Moreover, BAM has raised the annual dividend from US$1.28 per share in late 2023 to US$2.01 per share in 2026.

At its Investor Day on Sept. 17, 2026, management laid out a plan to more than double fee-related earnings per share, from US$1.97 today to US$4.08 by 2031.

Chief Financial Officer Hadley Peer Marshall said a widening fee base will support the company’s plan to grow dividends by 15% annually.

She also said that 88% of the capital Brookfield earns fees on is now long-term or permanent, making the income stream predictable.

CEO Connor Teskey clearly stated the priority:

BAM is an example of a quality dividend stock. You need to identify other such fundamentally strong stocks to create a diversified dividend portfolio in retirement.

Why a TFSA helps protect your OAS from the clawback

Where you hold your dividend stocks matters almost as much as which ones you buy.

OAS comes with a catch called the recovery tax, better known as the clawback. In 2026, you repay $0.15 of OAS for every dollar of net income above $95,323. For seniors aged 65 to 74, OAS disappears completely at roughly $154,708.

Dividends earned in a Tax-Free Savings Account don’t count toward that income test.

Withdrawals from a Registered Retirement Income Fund (RRIF) do count, and so do dividends earned in a regular taxable account. With a larger nest egg, that difference can be worth thousands of dollars a year.

The Foolish takeaway

CPP and OAS give Canadian retirees a dependable floor. On their own, they rarely pay for a comfortable life.

A portfolio of quality dividend stocks, held in the right account and built patiently over time, can close that gap.

Brookfield Asset Management shows what to look for: recurring earnings, a payout the business can sustain, and a clear plan to keep raising it.