3 Canadian Stocks to Buy if Rates Stay Higher for Longer

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.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTFFH$2,420.652$20.77$41.54Quarterly$4,841.30SLF$91.8176$3.60$273.60Quarterly$6,977.56POW$73.0795$2.67$253.65Quarterly$6,941.65

That mix could make a lot of sense for Canadians who want stocks that can keep earning, even when money stays expensive.

The post 3 Canadian Stocks to Buy if Rates Stay Higher for Longer appeared first on The Motley Fool Canada.

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More reading

• 3 TSX Stocks to Buy on a Red Day
• 2 Canadian Stocks to Buy if Mortgage Rates Stay High
• How Your TFSA Could Help You Earn $2,400 a Year in Tax-Free Passive Income
• How Splitting $30,000 Across 3 TSX Stocks Could Generate $1,315 in Dividend Income
• Manulife vs. Sun Life: 1 Canadian Insurer I’d Buy and Hold

Fool contributor Amy Legate-Wolfe has positions in Fairfax Financial. The Motley Fool has positions in and recommends Fairfax Financial. The Motley Fool has a disclosure policy.