The near-zero rate environment during the 2020 COVID year sparked a housing boom in Canada, but it eventually heightened economic pressures. Rising inflation in the post-pandemic period prompted the Bank of Canada (BOC) to begin an aggressive rate hike cycle. Its benchmark rate peaked at 5% in July 2023 and held steady until June 2024.
As of April 29, 2026, the rate is 2.25%. BOC Governor Tiff Macklem warns that consecutive rate increases are possible if oil prices remain high and push inflation higher amid the ongoing Middle East conflict.
Interest rate movements affect businesses and the investment landscape. Low interest rates typically favour the growth-oriented technology sector as well as real estate and utilities. Inversely, a big bank, a global insurer, and an alternative corporate funder will benefit from rate hikes or a higher-for-longer interest rate environment.
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Giant lender
Canadian Imperial Bank of Commerce (TSX:CM) is Canada’s fifth-largest bank. The $138.6 billion bank boasts a massive retail deposit base and capital strength. As of this writing, CIBC outperforms its big bank peers. At $153.54 per share, the year-to-date gain is 24.25%. The dividend offer is 2.79%.
In the first quarter (Q1) of fiscal 2026, revenue and net income rose 15% and 43% year over year to $8.4 billion and $3.1 billion, respectively. According to its president and CEO, Harry Culham, all business units reported record revenues and higher return on equity. Dividend reliability and consistency are never in question. CIBC has been paying quarterly dividends for 158 years and counting.
High interest rates boost profitability. CIBC earns a higher spread on loans, lines of credit, and variable-rate products, including mortgages, than it pays on savings and deposits.
Life insurance icon
Sun Life Financial (TSX:SLF) is a household name in life insurance globally. It is now a $53 billion financial services company providing asset management, wealth, insurance and health solutions to individual and institutional customers around the world. SLF trades at $99.03 per share, up 16.8% year to date and complemented by a 3.72% dividend yield.
High interest rates enable insurance companies to buy fixed-income assets at higher yields. Sun Life derives investment funds from collected premiums. Additionally, high rates lower its reserve requirements. For investors, SLF has raised dividends for five consecutive years (an average annual increase of 8.94%).
Its president and CEO, Kevin Strain, said Sun Life scaled its asset management platform during the quarter with two strategic acquisitions. The company also plans to acquire a multi-family real estate investment manager and vertically integrated property management business in the U.S.
Inflation-linked revenues
Alaris Equity Partners Income Trust (TSX:AD.UN) provides non-control, permanent equity capital, not debt, mostly to mid-market but profitable private companies in North America. The $1 billion private equity firm adds new partners yearly to provide follow-on capital. Management targets 3% to 5% annual organic growth from the current revenue streams.
Partner companies don’t pay fixed returns to Alaris. Instead, the inflation-linked payouts are based on gross revenue and gross profit. The payouts automatically increase when interest rates and inflation are high. In Q1 2026, earnings and comprehensive income climbed 75.9% year over year to $40.4 million versus Q1 2025.
AD.UN enjoys a 12.6% year-to-date gain, and its trailing one-year price return is +31.6%. At $22.75 per share, the dividend yield is a juicy 6.24%.
Elevated rate scenario
The window for a high-rate environment might open sooner than later. CIBC, Sun Life, and Alaris are well-positioned to expand and increase revenues in an elevated rate scenario.
