17 TSX Stocks That Could Look Smarter If Rate Hikes Return

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The Bank of Canada is not back in hiking mode today, but the conversation around inflation has become less comfortable again. That matters because a fresh rate-hike cycle would not hit the TSX evenly. Some businesses would feel immediate pressure through debt costs, valuation compression, or slower demand. Others, especially companies with deposit franchises, insurance float, fee-heavy operations, or flexible pools of capital, could suddenly look much more resilient.

That is why these 17 TSX names stand out. They are not identical rate winners, and none is immune to a weaker economy. But if borrowing costs were forced higher again, these are the kinds of stocks that could look smarter than many of the market’s usual income, utility, telecom, and long-duration favorites.

Royal Bank of Canada (RY)

Royal Bank still starts the conversation because scale matters when the rate backdrop gets messy. RBC reported record first-quarter 2026 net income of $5.8 billion, while net interest income reached $8.6 billion. That kind of earnings base matters in a higher-rate world because it gives management room to absorb credit bumps, reinvest in technology, and keep multiple profit engines running at once instead of relying on one narrow spread business.

What makes RBC especially interesting is its mix. It is not only a lender; wealth management, insurance, capital markets, and commercial banking all matter. If hikes returned, that diversification could help it look steadier than more rate-sensitive parts of the market. The catch is that even a giant bank is not insulated from mortgage renewal stress or softness in Ontario housing. Still, when policy gets tougher, the biggest deposit-rich franchises often regain their appeal quickly.

National Bank of Canada (NA)

National Bank has a habit of looking smaller than it really is in investor conversations. Its Quebec franchise is powerful, and its capital-markets and wealth businesses give it a profile that is more balanced than a plain-vanilla domestic lender. In the first quarter of 2026, National Bank reported net income of $1.254 billion, with management also highlighting good performance across business segments and the inclusion of Canadian Western Bank.

That mix matters if rates move back up. A return to tighter policy would not just be about loan pricing; it would also be about which institutions have strong regional loyalty, fee income, and enough operating leverage to stay productive when credit conditions stiffen. National Bank checks several of those boxes. It is not risk-free, especially with integration work still part of the story, but it could compare well against more housing-dependent or lower-growth financial names if markets start rewarding discipline and franchise quality again.

Bank of Montreal (BMO)

BMO’s appeal in a renewed hiking cycle comes from breadth. The bank ended fiscal 2025 with roughly $1.5 trillion in assets, and first-quarter 2026 results showed net interest income of $5.643 billion on revenue of $9.824 billion. Those are big numbers, but the more important point is how they are earned: Canadian and U.S. personal banking, commercial lending, wealth, and capital markets all contribute to the machine.

If hikes return, investors usually start asking which banks can protect margins without looking one-dimensional. BMO has enough commercial and cross-border exposure to make that discussion interesting. Higher rates can improve deposit economics and lending spreads, especially if they arrive for inflation reasons rather than recession reasons. The risk is that U.S. credit conditions can change quickly, and big diversified banks always carry execution complexity. Even so, BMO is the kind of institution that can look better when the market stops chasing simple duration trades and starts valuing earnings depth again.

CIBC (CM)

CIBC is often described as the most domestically exposed of the large Canadian banks, and that usually makes investors nervous when housing risk enters the room. Yet that same profile can become more attractive in a higher-rate environment if the economy stays functional and margins stabilize. CIBC’s first-quarter 2026 revenue was $8.398 billion, and reported net income hit $3.1 billion, a sharp jump from a year earlier.

What keeps CIBC on this list is that it does not need a perfect macro backdrop to look better than long-duration sectors. If hikes returned, the market would likely reward businesses with immediate earnings power, and banks still have that. CIBC’s challenge is obvious: Canadian households remain sensitive to higher payments, and mortgage renewals are still a pressure point. But precisely because investors know that risk so well, the stock can look smarter when credit trends are merely manageable instead of disastrous. In a rate scare, “less bad than feared” can become surprisingly powerful.

Toronto-Dominion Bank (TD)

TD remains a complicated case, which is partly why it belongs here. In the first quarter of 2026, reported net interest income was $8.789 billion and the CET1 ratio stood at 14.5%, while wealth and insurance businesses continued to post strong numbers. The bank’s sheer deposit base and diversified earnings still matter a great deal when interest-rate conditions get tougher and investors begin preferring balance-sheet scale again.

The reason TD could look smarter if hikes return is not that every problem disappears. It is that the market may re-focus on franchise strength, capital, and earnings power rather than only on the regulatory overhang from its U.S. AML issues. Wealth management and insurance also help smooth the picture; those segments generated $757 million in net income in the latest quarter. That does not make TD a clean story, and a renewed rate shock would still test consumer credit. But in a market that suddenly rewards hard earnings and capital buffers, TD can regain ground quickly.

EQB (EQB)

EQB is a different kind of rate story. It is not a giant incumbent defending legacy scale; it is a challenger bank that keeps trying to expand its funding base and customer reach. By the end of 2025, EQ Bank had 607,000 customers and nearly $10 billion in deposits, and first-quarter 2026 results showed 633,000 customers, a 2.02% adjusted net interest margin, and a 13.6% CET1 ratio. The planned PC Financial acquisition adds even more intrigue.

If hikes return, digital deposit gatherers become worth watching because funding quality matters just as much as lending volume. EQB’s pitch is that it can keep building a lower-cost franchise while staying nimble in niches larger banks do not dominate as aggressively. The flip side is that smaller lenders can feel funding pressure fast if competition intensifies. Still, this is one of the more interesting names on the TSX for a higher-rate stress test because its strategic direction is changing at the same time the macro picture could get tougher.

goeasy (GSY)

goeasy is not a safe stock in the traditional sense, but it is one that often forces investors to think clearly about pricing power and underwriting. Its latest disclosed highlights showed fourth-quarter 2025 loan originations of $952 million and a loan portfolio of $5.51 billion, up 20% from a year earlier. Those figures underline the company’s reach in consumer lending and the speed with which it has built scale.

If policy rates climb again, many investors will instinctively avoid consumer finance. That reaction is understandable, but it is not the whole story. Lenders that understand their customer base, price for risk, and manage collections aggressively can still outperform more complacent financial names. goeasy’s problem is obvious: a tougher household backdrop can produce higher delinquencies. But that is also why the stock can look smarter in a selective market. It is not a duration play or a yield trap. It is an operating business whose value depends on execution, not just on the hope that money gets cheaper.

Sun Life Financial (SLF)

Sun Life is one of the more straightforward “higher rates can help” names on the TSX. Its 2025 annual report described a business spanning 28 markets and serving more than 85 million clients, while reported net income for 2025 came in at $3.47 billion, up 14% from 2024. That matters because insurers with large investment portfolios can benefit over time as they reinvest cash flows at higher yields.

What makes Sun Life more than a simple bond-book story is its mix of insurance and asset management. If hikes return, investors may prefer companies that can collect premiums, reinvest at better rates, and still generate fee income from wealth and institutional businesses. Sun Life fits that profile well. The risk, of course, is that higher rates can also pressure markets and slow some savings activity. But compared with sectors that simply suffer when discount rates rise, Sun Life has an operating model that can become more attractive rather than less attractive.

Manulife Financial (MFC)

Manulife’s case is similar to Sun Life’s, but with a broader international twist and a strong emphasis on spread income. In its fourth-quarter 2025 discussion, management said core earnings increased 6% year over year, driven in part by higher investment spreads and favorable insurance experience. That is exactly the kind of language investors notice when asking which companies are structurally better equipped for a “higher for longer” world.

There is also a human element to Manulife’s appeal. This is a company that still has to prove it can convert global scale, Asian growth, and wealth momentum into consistently stronger shareholder returns. When hikes return, the market often becomes less patient with vague narratives and more interested in tangible earnings drivers. Better reinvestment yields are tangible. So are disciplined capital allocation and stable insurance economics. Manulife is not immune to market volatility, but it does not need falling rates to tell a convincing story. In a tougher policy regime, that independence becomes valuable.

Great-West Lifeco (GWO)

Great-West Lifeco is less flashy than some peers, which is often exactly the point. In the fourth quarter of 2025, base earnings were $1.245 billion, up 12% from a year earlier, and the company described 2025 as a record year for base earnings. Through Empower, Canada Life, and other operations, Great-West has meaningful exposure to retirement, wealth, insurance, and risk solutions rather than one narrow earnings stream.

If hikes return, that mix could look smarter for two reasons. First, like other insurers, Great-West can benefit over time from reinvesting at higher yields. Second, retirement and wealth platforms become more important when households and institutions need advice, protection, and product flexibility in a less forgiving market. It is not a dramatic stock, and that may be an advantage. Markets often rediscover respect for steady compounders when policy turns less friendly. Great-West’s biggest risk is that slower markets can affect flows, but its operating diversity gives it more resilience than many rate-sensitive income names.

iA Financial Corporation (IAG)

iA Financial does not always receive the same attention as the biggest Canadian lifecos, yet its recent numbers are hard to ignore. The company reported 2025 core EPS of $12.96, up 16% year over year, and a trailing core ROE of 17.1%. Management has also highlighted iA’s leadership in segregated fund assets under management, and total assets under management and administration were nearing $289 billion by late 2025.

That makes iA a compelling “smarter if hikes return” candidate. A company with insurance, auto finance, wealth, and investment businesses has multiple ways to benefit from firmer reinvestment yields and a market shift toward profitability over promise. The name is still not as widely discussed as the major banks or the largest insurers, which can create room for re-rating when fundamentals stay solid. The obvious caution is that credit-sensitive operations still need close monitoring. But in a market that starts rewarding earnings quality and product breadth, iA has more going for it than its profile sometimes suggests.

Intact Financial (IFC)

Intact is one of the clearest rate-resistant ideas on the TSX because property and casualty insurance works differently from long-duration income sectors. In the fourth quarter of 2025, net operating income per share rose 12% to $5.50, and the combined ratio was a very strong 85.9%. That kind of underwriting result matters because it means the business is not merely hoping investment income will save it; the insurance engine is already doing real work.

If hikes return, Intact’s case gets stronger. P&C insurers can reprice more regularly than many other financial businesses, and higher reinvestment yields can lift the return on the investment portfolio. That combination can make them look unusually sturdy when inflation and rates both refuse to settle down. The risk is catastrophe losses, which never disappear from the conversation. But Intact has spent years proving that scale, pricing discipline, and portfolio management matter. In a rate scare, that operating credibility can be worth more than a headline dividend yield.

Fairfax Financial Holdings (FFH)

Fairfax has long been built around a concept many investors forget until rates rise again: insurance float paired with a serious investment operation. In 2025, the company generated $2.574 billion in consolidated interest and dividends, and its insurance and reinsurance companies held a $70.0 billion investment portfolio at year-end. By the first quarter of 2026, consolidated interest and dividends had risen again to $662.1 million.

That is why Fairfax can look particularly smart if hikes return. Higher yields do not just change market narratives; they change actual investment income for companies that sit on large pools of investable assets. Fairfax also combines that with broad underwriting operations, which produced gross premiums written of $33.3 billion in 2025. The stock is never simple, and catastrophe exposure or portfolio volatility can still create sharp swings. But when money gets more expensive, businesses that earn more from cash and bonds tend to be re-rated quickly. Fairfax sits near the front of that line.

Definity Financial (DFY)

Definity is smaller than Intact and Fairfax, but that is part of the appeal. The company’s investor materials showed trailing-12-month gross written premiums of $4.8 billion, a 91.6% combined ratio for the fourth quarter of 2025, book value per share of $33.78, and a 12.2% operating return on equity. Those are not speculative startup numbers; they point to an insurer that is already producing respectable underwriting and capital outcomes.

If hikes return, smaller P&C names can attract fresh attention because the market starts appreciating businesses with both pricing power and investment leverage. Definity can potentially benefit from better reinvestment yields while still working on underwriting and growth. That is a useful combination when many popular TSX income names face the opposite problem. The risk is that smaller insurers do not have the same diversification as the largest incumbents, especially when catastrophe losses spike. Still, in a rate-driven re-ranking of TSX sectors, Definity could look smarter faster than many investors expect.

TMX Group (X)

TMX is not a bank and not an insurer, which is exactly why it belongs on this list. Its 2025 revenue reached $1.72 billion, up 18% from 2024, and the company’s investor material showed a business increasingly driven by data, derivatives, and market infrastructure. About 41% of 2025 revenue came from Global Insights, while 25% came from derivatives trading and clearing. That is a far more balanced model than the old stereotype of an exchange simply living off IPO excitement.

A return to rate hikes would likely mean more hedging, more volatility, and more demand for information. That does not always produce a happy stock market, but it can support an exchange-and-data operator. TMX can therefore look smarter in a rougher rate environment even if capital-raising activity slows. It is a tollbooth on market activity, not a pure bet on optimism. That distinction matters when investors suddenly stop asking which story is most exciting and start asking which business still gets paid when uncertainty rises.

Brookfield Corporation (BN)

Brookfield is one of the few TSX names that can plausibly argue higher rates may create more opportunity, not just more friction. In 2025, distributable earnings before realizations reached a record $5.4 billion. Brookfield also reported fee-bearing capital of $603 billion, $134 billion of dry powder available for deployment, and 24% growth in Wealth Solutions distributable earnings. Those figures show a company with scale, flexibility, and an appetite for market dislocation.

If hikes returned, asset values in some corners of the market would likely wobble again. That is often when Brookfield’s long-dated capital, operating expertise, and insurance-linked wealth platform become most useful. The company can be both a beneficiary of spread income and a buyer of assets that weaker owners are forced to sell. There are obvious trade-offs: higher rates can hurt valuations, slow fundraising in some strategies, and make private markets look less forgiving. But Brookfield has spent years preparing for exactly the kind of environment that makes other investors freeze.

Power Corporation of Canada (POW)

Power Corporation is not the market’s loudest name, but it may be one of the more quietly interesting ones if rates turn upward again. The company sits on a mix of insurance, retirement, wealth management, and alternative asset exposure through major holdings and platforms. In 2025, its alternative asset investment platforms raised more than $5.4 billion in new capital commitments. That gives Power a different profile from simple dividend stories that rely on falling rates to stay attractive.

What makes the stock potentially smarter in a renewed hiking cycle is its layered structure. Higher rates can support the earnings power of insurance operations, while wealth and alternative platforms add a different source of value creation. Investors do not always reward holding-company structures immediately, especially when markets are easy. In a more selective environment, though, diversified cash-generating assets can matter more than narrative simplicity. Power is unlikely to be the market’s most dramatic winner. It could, however, become one of those stocks that suddenly looks more sensible every time the rate outlook gets tougher.

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