Which Dividend Stocks in Canada Can Survive Rate Cuts

Rate cuts could lift dividend stocks, so here are three TSX picks positioned to benefit from lower borrowing costs and stronger payouts.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published October 8, 2025 3:30 pm EDT

| More on: CHP.UNEIFPPL

Key Points

Choice Properties' grocery-anchored portfolio, 97.8% occupancy, and strong liquidity make it likely to benefit from lower rates and NAV gains.
Exchange Income's acquisition-led model and strong cash flow mean cheaper financing would boost growth and make dividends more sustainable.
Pembina's contracted midstream cash flows and ongoing projects should see improved returns and dividend support if interest costs fall.

Looking for cash? Dividend stocks do seem like the right answer, but only if you find the right ones. That’s why today we’re looking at three dividend stocks that can survive the top headline of the moment: rate cuts. Rate cuts usually help dividend stocks by lowering discount rates and borrowing costs, often compressing cap rates. This supports valuations and dividend coverage. However, cuts can also signal weakening growth and may reduce cash flow. So let’s look at three that look like they’re solid dividend stocks in a prime position for future growth.

CHP.UN

First up, we have Choice Properties REIT (TSX: CHP.UN), a real estate investment trust (REIT) focused on mixed use properties, including residential properties as well as consumer staples like Loblaw. The company has shown its strength again and again, most recently during second quarter earnings.

Lower borrowing costs and cap-rate compression would likely increase the company’s net asset value (NAV) per unit, improving adjusted funds from operations (AFFO) over net income coverage. With NAV per unit at $14.38, lower rates would improve this. The dividend stock also holds high occupancy at 97.8% at writing, with long-term grocery-anchored retail and well-located industrial assets. This gives it stable cash flow even in a downturn.

CHP also has large liquidity available with $1.3 billion in available credit and a $13.5 billion pool of unencumbered properties. With an active transaction pipeline and developments as well, the dividend stock is nothing if not solid. Investors will want to trade AFFO to make sure that the dividend keeps up, but as of writing it’s looking stronger as rates come down.

EIF

Next up, we have Exchange Income (TSX: EIF), a top aerospace and manufacturing stock that would also see benefits from lower costs. Lower borrowing means acquisitions and fleet financing would be cheaper. This is relevant considering it’s an acquisition-led company, recently closing Canadian North.

During the second quarter, EIF stock saw strong cash generation and record revenue. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) hit $177 million, with free cash flow at $123 million. Meanwhile, it remains strong and is getting stronger following rate cuts with lower financing and improved acquisition economics. The main risk would be a demand decline, but its recent Canadian North long-term contract minimizes that risk.

PPL

Finally, Pembina Pipeline (TSX: PPL) is a solid midstream energy company that would also benefit from lower interest expenses. This would have to do mainly with variable debt and cheaper project financing. Lower rates improve cash flows and returns on growth projects. And Pembina stock has a lot of projects in the works.

Lower discount rates and stable long-term contracted cash flows would also increase asset values and support its already high dividend yield. Meanwhile, the company is coming off strong second-quarter earnings, with strong adjusted EBITDA at $1 billion and adjusted cash flow from operations of $698 million. This robust cash generation can cover dividends and capital expenditures.

Bottom line

All three of these dividend stocks should continue to be favourable in a lower-rate environment. Each can lower financing costs and boost asset valuations, but context matters. Economic weakness could also mean that operating cash flow falls. However, all three should benefit materially. That being said, always consider your own portfolio goals before making any investment decisions.