The new cost of money
After a decade of near-zero rates, capital once abundant is now scarce. Weighted average cost of capital (WACC) for TSX-listed firms has risen from 6.1% in 2019 to 8.8% in 2025, while net corporate debt exceeds $1.4 trillion (BoC).
| Metric | 2019 | 2023 | 2025 | Source |
|---|---|---|---|---|
| Avg. corporate WACC | 6.1 % | 8.3 % | 8.8 % | RBC Capital Markets |
| Corporate debt ($ tn) | 1.0 | 1.3 | 1.4 | Bank of Canada |
| Avg. dividend payout ratio | 41 % | 48 % | 52 % | StatsCan 36-10-0653 |
Strategic implications
Cheap leverage is gone; returns must now come from capital discipline, not expansion. CFOs are prioritizing internal reinvestment, share buybacks, and cost productivity over debt-driven M&A.
What leaders can do
- Re-benchmark hurdle rates. Adjust ROI thresholds to reflect risk premium.
- Free trapped capital. Monetize non-core assets and working capital.
- Adopt dynamic capital planning. Update WACC assumptions quarterly.
- Integrate finance and strategy. CFOs are becoming Chief Value Officers.
Arcus Insight: Financial agility is the new growth engine. Firms that treat capital like code — continuously optimized — will thrive in a higher-for-longer world.