Traditional workplace pensions are becoming rare. That leaves a gap between what most Canadians will get from government programs and what things actually cost in retirement. Fortunately, there is an alternative. You can create your own pension that can provide a supplementary income stream.
In order to create your own pension, investors need to select the right Canadian dividend stocks or ETFs that can compound over time.
Choosing dividend‑paying investments with steady cash flow goes a long way toward closing that retirement gap. And by reinvesting dividends early on and shifting to withdrawals later, investors can create a sustainable, long‑term income plan that behaves just like a traditional pension.
All you need is the right stocks to create your own pension, and fortunately, the market gives us plenty of options to choose from.
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Select a utility backbone for dividends
The first stock to own that can help create your own pension is Emera (TSX:EMA). Emera is a regulated utility that provides essential gas and electric services to customers in the U.S., Canada and the Caribbean.
One of the main advantages of investing in utility stocks like Emera is the stable business model that they adhere to. Utility services are regulated and bound by long-term contracts that span decades. This means that Emera generates a predictable and recurring revenue stream that lets it invest in growth and pay a dividend.
As of the time of writing, that dividend carries a yield of 4.1%. Additionally, the utility has amassed nearly two decades of consecutive annual increases.
If you’re looking to create your own pension, Emera is a perfect foundation for any income-producing portfolio.
Generate consistent cash flow with a midstream operator
If you want to create your own pension, you need a consistent cash flow. That’s where the next pick for that income portfolio comes into play. Pembina Pipeline (TSX:PPL) adds another layer of stability and income generation through its midstream energy operations.
Pembina’s operations connect producers to refineries, storage, and export markets across Canada and the U.S. This generates a predictable revenue stream backed by long-term contracts that also offer some defensive appeal.
Turning to income, Pembina has paid dividends for nearly three decades, which, when coupled with its current 4.5% yield, makes it a solid addition for any income portfolio.
Wrapping up with a diversified REIT ETF for income stability
Real estate plays a key role in many traditional pensions, and for Canadian investors, there’s an ETF that offers the income and stability of the REIT sector.
That ETF is the BMO Equal Weights REITs Index ETF (TSX:ZRE). The REITs Index offers an easy way to capture REIT exposure, and by extension, that income. The fund’s holdings are spread across both commercial and residential real estate, which reduces concentration risk.
In a portfolio tasked to create your own pension, REIT exposure adds both an income engine and diversification. That’s because the income generated is backed by property rents from the individual holdings, spread across hundreds of properties and units in multiple sectors.
The result is a 4.5% yield that pays distributions out on a monthly cadence, translating into a stable, recurring cash flow.
How to create your own pension today
Combining utilities, pipelines, and REITs creates a well‑balanced income engine that can mirror what pension funds offer.
These sectors produce complementary cash flows that reduce volatility and improve long‑term stability. Given an initial investment and time to compound, these investments can provide a generous annual income.
This approach mirrors how institutional pension funds rely on stable, income‑producing assets to support long‑term payouts.
Here’s an example of how an initial $50,000 allocation into each can provide an income of nearly $6,500. Prospective investors should also note that the dividends can be reinvested over time, allowing the eventual income to compound to higher levels.
