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.

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.

protect, safe, trust

Image source: Getty Images

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.

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

A meter measures energy use.
Dividend Stocks

Canadian Utility Stocks Report Soon: Should You Buy Before or After Earnings?

Canadian utility stocks report soon. See what Fortis, Emera and Canadian Utilities investors should consider before buying ahead of earnings.

Read more »

Person uses a tablet in a blurred warehouse as background
Dividend Stocks

An Ideal TFSA Stock for October, Paying 0.34% Each Month

Explore the advantages of a TFSA and discover how selecting the ideal TFSA stock can maximize your investment returns.

Read more »

shoppers in an indoor mall
Dividend Stocks

A Top-Notch 5.5% Dividend Stock Paying Cash Every Month in Retirement

Crombie REIT offers a dependable yield and a low payout ratio. Discover why it’s a top choice for monthly retirement…

Read more »

A glass jar resting on its side with Canadian banknotes and change inside.
Dividend Stocks

Dividend Income on a Small Budget: Where Canadians Can Start

Stocks like Fortis Inc (TSX:FTS) can produce substantial dividend income.

Read more »

monthly calendar with clock
Dividend Stocks

How to Use a TFSA to Generate $500 in Monthly Tax-Free Income

Need $500 a month tax free? At a 6.9% yield, about $87,000 in a TFSA could do it. See how…

Read more »

customer uses bank ATM
Dividend Stocks

TFSA Withdrawal Rules Every Canadian Investor Should Know

Beware that re‑contributing withdrawn funds in the same calendar year can lead to a penalty from potential excess contribution.

Read more »

A woman stands on an apartment balcony in a city
Dividend Stocks

A 5% Dividend Stock to Buy for $100 Every Month

Here’s a 5% dividend stock that can generate $100 every month from a large portfolio of real estate properties spread…

Read more »

woman holding steering wheel is nervous about the future
Dividend Stocks

Tax Refund or Bonus Coming? A Smart Way to Fund Your Emergency Cushion

A refund or bonus could bring your emergency fund months closer to completion and give your investments more time to…

Read more »