A maturing guaranteed investment certificate (GIC) used to create an easy decision. Accept another attractive guaranteed rate, and carry on.
That decision is less automatic now. The Bank of Canada has held its policy rate at 2.25% since October 2025. Meanwhile, one-year GIC rates at major banks have fallen well below the levels savers enjoyed a few years ago.
Your principal can remain boring, but that return is getting less exciting.
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Start with the deadline
The first question isn’t which GIC pays the highest rate, but when you’ll need the money. Cash needed for a home purchase, tuition, renovations, or the first few years of retirement shouldn’t suddenly become a stock-market experiment because a GIC rate looks disappointing.
Eligible GIC deposits at Canada Deposit Insurance Corporation (CDIC) member institutions can receive up to $100,000 of coverage per insured category, including principal and interest. Locking in longer gives you a higher rate today, but creates another risk: flexibility.
Suppose interest rates rise again after you’ve committed to a five-year GIC. Your money could remain stuck earning yesterday’s rate. Though if rates fall, you’ll look clever. A GIC ladder can reduce that gamble. Instead of locking everything for five years, split the money among several maturity dates. Each year, part becomes available to spend or reinvest at prevailing rates.
I’d also consider keeping short-term needs in GICs while moving money I won’t need for many years toward equities. A GIC guarantees principal and interest. A dividend stock offers neither, but it can potentially provide rising income and share-price growth over time. One I’d consider is Pembina Pipeline (TSX: PPL).
Collect more than interest
Pembina owns pipelines, natural-gas processing facilities, storage, export infrastructure, and other midstream energy assets. Much of the business earns fees for moving and processing energy rather than making a direct bet on the daily price of oil.
Second-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) reached $1.06 billion, up from $1.01 billion a year earlier. Adjusted cash flow from operations climbed to $778 million.
More important for the future, Pembina sanctioned roughly $3 billion of new projects during the quarter, including its Heartland Extraction Plant and Greenlight Electricity Centre. Management is targeting 5% to 7% compound annual growth in fee-based adjusted EBITDA per share through 2030. That could support future cash flow long after today’s GIC matures.
What $10,000 buys
Pembina recently traded at $64.66 and pays $0.74 quarterly, or $2.94 annually. Here’s what $10,000 could bring in through dividends alone during that time with a yield around 4.5%.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| PPL | $64.66 | 154 | $2.94 | $452.76 | Quarterly | $9,957.64 |
By comparison, $10,000 in a 2.7% one-year GIC would earn approximately $270 over a year before tax. The extra income isn’t free. Pembina’s dividend can change, and its share price can fall. That’s why I wouldn’t replace emergency savings with Canadian dividend stocks simply because their yields look larger.
What’s more, Pembina isn’t cheap enough to ignore valuation either. Shares trade around 20 times forward earnings after climbing more than 20% this year. Major projects also create construction, financing, regulatory, and execution risks. A GIC doesn’t give you those headaches.
Bottom line
That’s precisely why the choice depends on the job your money needs to perform. Money needed soon belongs somewhere dependable. Long-term capital can tolerate more movement in exchange for greater growth potential, particularly inside a TFSA when sufficient contribution room exists.
All said and done, I wouldn’t automatically roll a matured GIC into another long-term GIC, but separate the money first. Keep near-term spending safe. Consider a GIC ladder if certainty matters. Let genuinely long-term money compete for higher returns elsewhere.
A guaranteed 2% to 3% can be exactly the right rate for money you can’t afford to lose. It becomes expensive when you’re locking away money that could have decades to grow.
