3 Canadian Stocks to Buy if Rates Stay Higher for Longer

If rates stay higher for longer, these three financial stocks can still generate durable earnings and dependable income from strong balance sheets.

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 April 24, 4:00 pm EDT

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Key Points

Higher rates reward financials that earn more on invested assets and don’t rely on cheap borrowing to grow.
Fairfax and Sun Life benefit from insurance float and investment income, with solid profitability and healthy capital levels.
Power Corporation offers a cheaper, diversified way to own financial and asset-management businesses, though it can trade at a holding-company discount.

Higher rates can stick around for longer than investors expect, and that changes the playbook. Canadians should pay closer attention to balance sheets, steady cash flow, pricing power, and businesses that can either earn more from invested assets or hold up when borrowing stays expensive. In this kind of market, financial stocks with durable earnings and disciplined capital allocation can still look very attractive.

FFH

Fairfax Financial (TSX: FFH) owns a large insurance empire, but it also has a deep investment portfolio and a long history of leaning into dislocated markets. That can work well when rates stay elevated, as insurers can earn more on the cash and bond portfolios sitting behind their operations. Fairfax just posted one of the strongest years in its history, with 2025 net earnings of US$4.77 billion, up from US$3.87 billion in 2024. Gross premiums written rose to US$33.6 billion, and book value per basic share climbed to US$1,260.19 from US$1,059.60.

In the last year, Fairfax stock completed a $650 million senior notes offering in February and agreed in March to sell part of its Poseidon stake for about US$1.9 billion, which adds even more flexibility. Even after Fairfax stock’s strong run, the valuation still does not look stretched, with a trailing price-to-earnings ratio of about 8.5. For investors who want a higher-rate winner with real earnings power, it still looks compelling.

SLF

Sun Life Financial (TSX: SLF) runs a wide mix of insurance, wealth, asset management, and health businesses across Canada, the United States, and Asia, creating diversification when the economy feels uneven. In its latest results, Sun Life stock reported fourth-quarter underlying net income of $1.1 billion, up 13% from a year earlier, while full-year underlying net income rose 9% to $4.2 billion. Underlying earnings per share (EPS) climbed 12% for the year, and the LICAT ratio came in at a very healthy 157%.

Sun Life stock also stayed busy. Starting Jan. 1, 2026, it changed how it reports its asset management business, and in March, Sun Life completed the purchase of the remaining stakes in BGO and Crescent Capital. That gives it more exposure to fee-based businesses, which can support growth even if rates remain high. Assets under management in one of its reporting lines were $894 billion at quarter-end, and Sun Life stock recently traded at roughly 15 times trailing earnings with a dividend yield near 4%.

POW

Power Corporation (TSX: POW) is the sleeper pick here. It’s a holding company, but the key point is simple: investors get exposure to Great-West Lifeco, IGM Financial, GBL, and alternative asset platforms in one package. That mix can work nicely when rates stay higher, especially as insurance and wealth businesses often benefit from higher investment income and sticky client assets.

In its latest results, Power stock reported 2025 adjusted net earnings of $3.4 billion, or $5.31 per share, up from $3 billion, or $4.58 per share, in 2024. Adjusted net asset value per share jumped 41.9% to $85.77. Recent news also gave investors more to like. Power raised its dividend by 9%, bought back 12.4 million shares for $711 million in 2025, and returned more than $1.5 billion in dividends to shareholders. Power stock also shows a dividend yield around 3.7% at writing. The risk is that holding companies often keep trading at a discount, but if rates stay high and its major subsidiaries keep delivering, that discount could look too cheap to ignore.

Bottom line

If rates stay higher for longer, investors do not need to hide. They just need to get pickier. Fairfax brings punch, Sun Life brings balance, and Power brings value. And all can bring ample income in with even $7,000.