It is difficult to predict the future, but some things are clear if you look in the right direction. The trade war uncertainty is here to stay in 2025. That means energy and automotive stocks that rely heavily on exports to the United States are out of the picture if volatility is not something you like. We can revisit these stocks when the dust settles on the heated trade talks. One mega-trend in favour of Canadian investments is the easing of monetary policy.
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A mega trend shaping Canadian investments in 2025
Earlier, BMO Capital Markets expected the Bank of Canada to cut interest rates to 2.5%. However, in light of the developments in the trade war, a tariff implementation could encourage the Bank of Canada to accelerate the rate cut and bring it down to 1.5%, as per this Canadian Mortgage Trends article.
Interest rates have a strong influence on how Canadians invest. The rate cut means Canadians will have to say goodbye to their 5% risk-free return from a high-interest savings account (HISA) or guaranteed investment certificate (GIC). This could encourage risk-averse investors to return to the stock market and look for low-volatility stocks that could generate stable income.
Dividend stocks gain momentum in 2025
Early signs of this shift are visible in the stock price momentum of dividend aristocrats like Enbridge (TSX:ENB) and Telus Corporation (TSX:T).
Enbridge stock
Enbridge stock has surged 36% since June 2024, when interest rate cuts began and the company completed the acquisition of three U.S. gas utilities. The stock was trading at its 10-year high of above $65 until U.S. President Donald Trump’s tariff threat brought some correction in the stock price.
Enbridge’s pipeline infrastructure connects America to Canada and ensures smooth oil and gas transmission. It earns toll money for the volume transmitted. Any disruption in oil and gas exports between the two countries could hit Enbridge’s cash flow and pull down the stock.
While Enbridge is a good dividend stock, now may not be a good time to invest in it because of its dependence on exports to the United States. Moreover, buying a range-bound stock near its high could reduce returns. You could consider buying it when the stock price falls below $50 price, as you can lock in a 7% annual dividend yield.
Telus stock
Telus stock has just begun its rally in 2025 as the Canadian Radio-television and Telecommunications Commission (CRTC) has upheld its decision to retain the wholesale fibre mandate. The company is onboarding clients in new markets – Ontario and Quebec – by offering bundled services at affordable rates using rival networks.
Telus has a significant debt of over $28 billion on its balance sheet. However, that is not a major concern as the company operates on a high-leverage model because of its assured cash flows. The rising operating profit from falling interest rates and higher cash flows from subscriptions could help Telus reduce the net debt-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) to its target range of 2.2–2.7 times from 3.8 times as of September 30, 2024.
Telus stock is seeing a recovery but is still trading closer to its four-year pandemic low of around $21. The megatrend of falling interest rates could bode well for Telus and the trade war uncertainty would not affect its fundamentals. Risk-averse investors can find a low-volatility alternative to their GICs that generates a 7.6% annual yield in Telus.
