After the recent rate cut, many investors might be feeling relieved that the economy is finally in a place where central banks are easing up. Higher interest rates have affected everyone across the board, from consumers with egregious debt to publicly traded companies and their investors.
As more interest rate cuts come along, Canadians laden with high household debts have plenty of reasons to cheer central banks on.
The Bank of Canada and the U.S. Federal Reserve enacted a series of aggressive interest rate hikes over the last couple of years due to rising inflation. With inflation finally cooling, we might be in a falling interest rate environment that can make life a little easier for everyone.
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When are more interest rate cuts coming?
If you are a new investor awaiting further interest rate cuts to capitalize on the next bull market, be warned that there is no smooth sailing in the near future. While there are definitely more interest rates coming, there is no way to know how many or how aggressive they will be this year. It might take several years for central banks to enact more, and we don’t know where they might settle in the next few years.
The fact that the inflationary environment might make a comeback means there can be far more market volatility ahead. The Bank of Canada has set a target range of 2% inflation, but there is always a chance that inflation can go higher again. Even if we see inflation rates go lower than 2% in the distant future, you should not hold off on investing till then.
To make the most out of being a stock market investor, you should invest now and prepare your portfolio for growth when a low-rate environment finally arrives and acts as the tailwind to grow it.
A dividend stock that can be the perfect low-rate play
While the interest rates from pre-COVID times might not be on the table right now, there is always the possibility of a comeback to at least near historically low interest rates in the long run. Publicly traded companies significantly affected by the financial burdens of high interest rates might see lower interest rates when they happen as a welcome sight.
Lower interest rates can mean more affordable capital expenditures, better cash flows, and improved profitability. Rogers Communications (TSX: RCI.B) is one such ailing stock to consider investing in right now. RCI stock is a $28.10 billion market capitalization communications and media company headquartered in Toronto.
After its merger with Shaw Communications, Rogers Communications is in a better position to give more competition to the telecom industry’s market leaders in Canada. A merger also means savings and a greater share of the market. Combined with lower costs due to falling interest rates, it can deliver far greater value to investors in the coming years.
Foolish takeaway
As of this writing, Rogers Communications stock trades for $51.67 per share and offers a 3.87% dividend yield. Down by 20.15% from its 52-week high, it might be a bargain at current levels to consider for your portfolio.
