Interest rates are continuing to hit new lows each and every day (it seems). Capital is also fleeing from equity markets to bonds. This makes finding interest-sensitive companies that are likely to make it out of this mayhem in relatively decent shape a difficult task.
I’m going to highlight three such companies to buy on the dip.
The parent company of Bell, BCE (TSX:BCE)(NYSE:BCE) is a fantastic long-term option for defensive investors seeking a mix of growth and income. BCE carries a dividend yield of approximately 6%. Also, BCE has a very respectable track record of dividend increases over time, checking quite a few boxes for long-term investors looking to nibble away at companies that are highly defensive but have also been hit by this most recent market selloff.
New telecommunications regulations have been announced by the Federal government. These regulations target the pricing of two- and six-gigabyte plans from BCE and its peers. They have caused somewhat of a ruckus with respect to long-term margin expansion possibilities for Canada’s digopoly of telecommunications companies.
But I think his headwind is likely to be offset by the 5G revolution, which is only beginning. The 5G revolution could prove to be the long-term catalyst that long-term investors in companies like BCE are looking for.
The real estate investment trust (REIT) space is one that is certainly a key interest rate-sensitive sector. This sector has provided excellent growth and income to investors in recent years, as interest rates have continued to decline.
The reality is that a number of pundits remain convinced that central bank interventions like interest rate cuts only serve to add fuel to the fire. This is particularly true in housing markets like Vancouver in Toronto. However, these interventions have also shifted cap rates lower for REITs across the globe.
This has raised valuations accordingly and provided a runway for high-quality REITs like WPT Industrial REIT to finance, at rock-bottom rates, existing properties or new developments. WPT’s portfolio is also based in the U.S. industrial space. But the trust is linked to Canada, providing Canadian investors with geographical and currency diversification.
Brookfield Asset Management
Perhaps the greatest Canadian conglomerate on the TSX today is Brookfield Asset Management.
Brookfield has been hurt by the recent market selloff but to a much lesser degree than other acquisition-focused Canadian corporations. This fact speaks to the quality of assets held in the company’s portfolio.
Brookfield continues to create excellent long-term shareholder value via spinning out subsidiaries and otherwise consolidating acquisitions where synergies exist, encompassing excellent managerial prowess.
Stay Foolish, my friends.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends BROOKFIELD ASSET MANAGEMENT INC. CL.A LV. Fool contributor Chris MacDonald does not have ownership in any stocks mentioned in this article.