3 Stocks That Benefit From Higher Interest Rates

Take advantage of these higher interest rates rather than worry over them by investing in these three top-notch dividend stocks.

| More on:
data analytics, chart and graph icons with female hands typing on laptop in background

Image source: Getty Images

Higher interest rates overall aren’t exactly too great for the average Canadian. Higher rates mean higher costs when it comes to loans, which most of us have seen through higher mortgage rates. After a pandemic that saw some of the lowest interest rates, those are now coming up for renewal. And that means signing at interest rates we haven’t seen in over a decade at least.

Yet there are ways to make back some of that cash. And that comes from investing in companies that can take advantage of these higher interest rates. So, with that in mind, here are three companies I would invest in during periods of higher interest rates.


Canadian banks can do well during this time, as higher interest rates mean they can charge higher costs for services. And some of those services remain essential, such as wealth and commercial management. This is why I would certainly consider Canadian banks that are strong in this space.

It’s also why Royal Bank of Canada (TSX:RY) has done so well. Its wealth and commercial management business has remained strong for decades. Yet now, it’s even expanding. This comes from its purchase of HSBC Canada.

The investment leaves Royal Bank stock with not just a new list of clientele but also high-income newcomers to Canada. Investors then can see why shares have risen back near 52-week highs, with shares up 22% since the market bottom. And with a dividend yield of 4.09%, that’s even more cash to consider.


Another area that remains essential for most Canadians is insurance, though it depends on what kind. Property and casualty insurance are both two kinds of insurance that Canadians need, no matter what. And it’s why Fairfax Financial Holdings (TSX:FFH) is one of the best options to consider.

The company’s insurance arm and underwriting business have not just kept Fairfax stock afloat but also growing. This will continue as interest rates remain high. But if you think it will come down afterwards, think again.

Fairfax stock’s chief executive officer Prem Watsa also uses this period of high rates and inflation to look for struggling businesses. This allows the company to invest in these value companies when the market regains strength. And it’s why the stock has done so well for decades. So, with shares up 61% in the last year and a divided yield at 1.39%, it’s another strong one to consider among higher interest rates.


Banks aren’t the only companies that provide loans. In fact, there are more options than ever, and Canadians are always looking for the best deal during higher interest rates. This is why a company such as goeasy (TSX:GSY) continues to be a strong option.

In a high interest rate environment, goeasy stock has seen Canadians seek it out for a lower-rate option — without going to the riskier, smaller institutions. Meanwhile, during a lower-rate environment, Canadians are taking out more loans at lower rates. So, it’s a win-win for the company.

It’s no wonder then that goeasy stock has continued to climb higher, with a 2.83% dividend yield and shares up 73% in the last year alone! And it’s only likely to climb even higher.

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 Amy Legate-Wolfe has positions in Goeasy and Royal Bank Of Canada. The Motley Fool has positions in and recommends Fairfax Financial. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Cogs turning against each other
Dividend Stocks

1 Magnificent TSX Dividend Stock Down 9% to Buy and Hold Forever

A high-yield TSX dividend stock is a buying opportunity for long-term investors.

Read more »

money cash dividends
Dividend Stocks

2 Under-$10 Dividend Stocks I’d Buy Right Now

Here's why low-cost dividend stocks such as Decisive Dividend should be part of your shopping list in 2024.

Read more »

Canadian Dollars
Dividend Stocks

5 Stocks You Can Confidently Invest $500 in Right Now

These five stocks are all some of the top businesses in Canada, making them stocks you can buy confidently in…

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

Worry-Free Dividends: 3 Stocks for Canadian Investors

These three Canadian stocks can help you earn worry-free dividends irrespective of market conditions.

Read more »

Woman has an idea
Dividend Stocks

The Smartest TSX Dividend Stocks to Buy With $1,000 Right Now

Here's why blue-chip TSX dividend stocks such as BAM and BMO should be a part of your shopping list in…

Read more »

stock data
Dividend Stocks

TFSA Pension: 1 Great Canadian Dividend Stock to Own for Growing Passive Income

This TSX dividend stock is down 35% from the 2022 high. Is it finally oversold?

Read more »

question marks written reminders tickets
Dividend Stocks

Can You Earn $250 a Month With Dividend Stocks?

These three dividend stocks could help you earn a stable passive income of over $250/month.

Read more »

calculate and analyze stock
Dividend Stocks

Best Stocks to Buy in May 2024: TSX Consumer Staples Sector

Consumer staples stocks are a core part of a diversified portfolio. Here are some of the best stocks to consider…

Read more »