The Bank of Canada (BoC) raised its benchmark interest rate by 0.25 percentage points to 2.50% on October 28, 2026, its first hike since 2023. BoC governor Tiff Macklem cited concerns over global oil prices fueling broader inflation and hinted at further hikes if inflation persists.
With this shift, Canadian investors may need to adjust their Tax-Free Savings Account (TFSA) strategies. Two financially resilient stocks highlighted for their potential are Royal Bank of Canada (TSX: RY) and Sun Life Financial (TSX: SLF).
Royal Bank, trading at approximately $288 per share, offers a 2.4% dividend yield with a 15-year dividend growth rate of 7.6%. Its shares have surged 244% over the past three years, delivering around 70% annual returns with dividends reinvested. Analysts consider it fairly valued, suggesting future returns will rely more on earnings and dividend growth.
Sun Life, priced at about $214 per share, provides a 3.3% dividend yield and an 8.8% dividend growth rate over the last decade. As a leading insurer, it benefits from higher interest rates through improved investment yields. Both companies are expected to grow earnings per share by at least 8% annually, potentially offering annual returns of 10% for Royal Bank and 11% for Sun Life, including dividends.