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

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Created with Highcharts 11.4.3Rogers Communications PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

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.

Should you invest $1,000 in Nvidia right now?

Before you buy stock in Nvidia, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Nvidia wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Canada day banner background design of flag
Dividend Stocks

Top Canadian Stocks to Buy Right Now With $5,000

Looking for some safe, long-term stocks? These Canadian stocks are where you should look first.

Read more »

Car, EV, electric vehicle
Dividend Stocks

Outlook for Magna Stock in 2025

Magna stock has sunk into the toilet, but it could now be one of the best undervalued stocks out there.

Read more »

alcohol
Dividend Stocks

Why I’d Consider These 3 Blue-Chip Dividend Stocks for a $20,000 Lifelong Investment

In a market correction, it’s essential to focus on blue-chip stocks that offer stability and long-term growth potential.

Read more »

Canadian dollars are printed
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $14,000

Investing a total of $14,000 across these three stocks could earn you more than $1,039 in tax-free income each year.

Read more »

coins jump into piggy bank
Dividend Stocks

Where I’d Invest $12,000 in Canadian Stocks for Reliable Dividends

Want reliable dividends? Here's a trio of stocks that can provide a juicy income stacked for growth, even with a…

Read more »

Young Boy with Jet Pack Dreams of Flying
Dividend Stocks

Beginner Investors: 4 Top Canadians Stocks to Buy in 2025

If you're new to investing and looking for some Canadian stocks that are worry free, here's where to go.

Read more »

protect, safe, trust
Dividend Stocks

3 Canadian Stocks to Play Defence in a Trade War

Are you wondering what stocks could be safe to buy and hold through the market turmoil? Here are three to…

Read more »

A meter measures energy use.
Dividend Stocks

2 Canadian Utility Stocks to Buy and Hold for Lifelong Income

Here are two Canadian utility stocks you can buy and generate a steady stream of dividend income in 2025 and…

Read more »