Five stocks to hold in a rising interest rate environment

Foresters Asset Management's Suzann Pennington picks two energy stocks, two banks and one healthcare company.

Ruth Saldanha 29 October, 2018 | 5:00PM

The Bank of Canada last week raised its benchmark interest rate by another 25 basis points to 1.75%, broadly in line with market expectations. The rate hike is the fifth since the bank began raising rates in 2017.

"Governing Council agrees that the policy interest rate will need to rise to a neutral stance to achieve the inflation target," policy makers led by Bank of Canada Governor Stephen Poloz said.

"To achieve its target neutral rate implies the BoC is targeting at least three more quarter-point rate hikes," said Suzann Pennington, chief investment officer for Foresters Asset Management, which oversees a suite of mutual funds under the imaxx brand. She notes that as rates move to neutral, stock valuations become even more important and investors shift to visibility of earnings, which typically results in market volatility as markets adjust and question earnings forecasts.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
CVS Health Corp71.86 USD-0.19
Marathon Petroleum Corp57.57 USD1.95
Royal Bank of Canada107.76 CAD-0.08
Shawcor Ltd Class A11.06 CAD0.09
The Toronto-Dominion Bank75.49 CAD0.25

About Author

Ruth Saldanha  Ruth Saldanha is Senior Editor at Morningstar.ca