1 No-Brainer Stock to Buy if Interest Rates Keep Dropping

Rogers Communications (TSX:RCI.B) can be an excellent bargain for investors who want to leverage interest rate cuts in the coming years.

| More on:
a person looks out a window into a cityscape

Image source: Getty Images

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.

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.

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.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Rogers Communications. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

2 TSX Stocks Poised to Have a Big Summer

Restaurant Brands International (TSX:QSR) stock and another darling that could be too cheap to ignore this summer.

Read more »

Dividend Stocks

Forget Fortis Stock: Buy This Magnificent Utilities Stock Instead

Looking for high dividends and returns? Then I'm sorry, but Fortis (TSX:FTS) stock probably isn't for you.

Read more »

Increasing yield
Dividend Stocks

2 High-Yield (But Slightly Risky) Stocks to Keep Your Eye on

Have these top TSX dividend stocks finally bottomed?

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks I’d Buy if They Fall a Bit

Any near-term decline in these two top Canadian dividend stocks will make them look even more attractive.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $3,000? 3 Dividend Stocks to Buy and Hold for the Long Term

You can buy these three Canadian dividend stocks with an investment as low as $3,000 right now and expect to…

Read more »