3 Stocks to Defend Your Wealth as Interest Rates Rise

Three stocks are the best options to defend and protect your wealth against surging interest rates.

| More on:
protect, safe, trust

Image source: Getty Images

The aggressive rate hike campaign by the Bank of Canada to control inflation is a strong headwind for stocks. The Feds did not hold back if you look at the timeline of rate hikes in Canada. They raised the policy rate seven times in the seven times they met in 2022, 4.25% ending at year-end.

For 2023, the policymakers met seven times, implemented rate hikes thrice and paused in four. The last scheduled meeting for the year is on Dec. 6, 2023. Rate-sensitive stocks suffered sharp declines as a result. However, some TSX stocks endure the shock and even offer protection.

Budget-friendly fast food

Restaurant Brands International (TSX:QSR) outperforms because food is essential, and quick-service restaurants offer budget-friendly meals. In the second quarter (Q2) of 2023, net income fell 31.3 % to US$364 million, not due to weak sales but the income tax expense in the current year and unfavourable foreign exchange movement.

Total revenues rose 6.4% to US$1.83 billion from a year ago, while systems-wide sales rose 10.9% year over year. RBI chief executive officer (CEO) Josh Kobza credits the brands’ strength, franchises’ efforts, and home market franchisee profitability growth for another quarter of double-digit system-wide sales growth.

Kobza said, “I am confident we are well positioned to enter 2024 with momentum.” QSR trades at $94.03 per share (+9.99% year to date) and pays a decent 3.24% dividend.

Affordable everyday products

Nothing is surprising about Dollarama’s (TSX:DOL) +24.30% market-beating return thus far in 2023. The business of this $27.7 billion operator of dollar chain stores is recession-proof. If you invest today ($98.13 per share), the consumer defensive stock also pays a 0.28% dividend.

In Q2 fiscal 2024, sales and net earnings increased 19.6% and 27% to $1.45 billion and $245.7 million versus Q2 fiscal 2023. Also, there were 18 net new stores compared to 13 a year ago. Its president and CEO, Neil Rossy, said, “Dollarama continues to deliver unparalleled value to a growing number of consumers seeking affordable everyday products at low price points.”

Rossy expects the strong demand to persist through the rest of the year amid the current macroeconomic environment. Dollarama hopes to end fiscal 2024 with 60 to 70 net new store openings and achieve 10% to 11% comparable store sales growth.

Lottery and charitable gambling

Pollard Banknote (TSX:PBL) has rewarded investors with superior gains in 2023. At $29.30 per share, the current investors are up 53.99% year to date and partake in the modest 0.57% dividend.

Apart from lottery and gaming solutions, the $788.87 million company is the largest and second-largest provider of instant tickets based in Canada and the world, respectively. Management believes Pollard is now North America’s second-largest bingo paper and pull-tab supplier and the largest supplier of iLottery solutions in the U.S. lottery market via a 50% joint venture arrangement.

In Q3 2023, net income reached $7.7 million compared to a $0.2 million net loss in Q3 2022. Pollard also achieved quarterly records in combined sales, record-level iLottery sales, and adjusted EBITDA. Pollard expects overall demand for its products and solutions to remain strong but not instant ticket volume.

Protect your wealth

QSR, DOL, and PBL are outstanding choices if you need to take a defensive position and protect your wealth against high interest rates.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Pollard Banknote and Restaurant Brands International. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

The TFSA Play: Turn $6,500 Into a Retirement Goldmine

This is how I would personally invest a $6,500 TFSA contribution for long-term growth.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

TFSA Investors: How to Earn $100 Each Month for Retirement

High-yield dividend stocks like Peyto Exploration and Production offer TFSA investors exposure to very generous yields.

Read more »

Man holding magnifying glass over a document
Dividend Stocks

Dividend Seekers: 2 Incredibly Cheap TSX Stocks to Buy for Dividends

These two TSX stocks can be excellent investments for long-term dividend income in a self-directed portfolio.

Read more »

grow money, wealth build
Dividend Stocks

Can Canada’s Dividend Aristocrats Keep it Up?

Are you interested in dividend stocks? Here are three Canadian Dividend Aristocrats that could keep paying shareholders!

Read more »

The sun sets behind a high voltage telecom tower.
Dividend Stocks

Does Algonquin Stock’s 7.68% Dividend Yield Make it a Buy?

Algonquin (TSX:AQN) stock saw some recent improvements during the last quarter, but is that enough to consider its dividend yield?

Read more »

Illustration of bull and bear
Dividend Stocks

Defensive Sectors: A Safe Haven for Canadian Investors in a Bear Market

There are defensive stocks, and then there are stocks that will help your portfolio soar out of this bear market.…

Read more »

Dividend Stocks

How to Build a Passive Income Portfolio Starting With Just $6,500

Looking to build a passive income portfolio? There's no shortage of great options on the market, including these three stellar…

Read more »

Dividend Stocks

New TFSA Limit for 2024: Where to Invest $7,000

Canadian investors can hold blue-chip TSX stocks such as TD Bank in a TFSA and generate outsized returns in 2024.

Read more »