Interest Rate Cuts on the HorizonInterest Rate Cuts on the Horizon As interest rates have soared, investors and businesses alike have been feeling the pinch. However, recent rate cuts have sparked hope that the economy is stabilizing. Canadians burdened with high household debt are particularly relieved. Central Bank Actions The Bank of Canada and the U.S. Federal Reserve have been raising interest rates aggressively to combat inflation. As inflation cools, these central banks are beginning to pull back. Uncertainty Ahead While more rate cuts are expected, the timing and magnitude remain uncertain. The potential for a resurgence of inflation could result in further interest rate hikes. Investment Strategy New investors expecting a smooth ride to the next bull market should be cautious. Market volatility is likely to persist. Instead of waiting for further rate cuts, it’s advisable to invest now and prepare for growth when interest rates eventually stabilize. Rogers Communications: A Low-Rate Play Rogers Communications, a Canadian media and communications company, is a potential beneficiary of lower interest rates. The merger with Shaw Communications has enhanced its competitive position and potential cost savings. A combination of interest rate cuts and lower costs could translate into value for investors in the long term. Rogers Communications Snapshot * Market capitalization: $28.10 billion * Share price: $51.67 * Dividend yield: 3.87% * Down 20.15% from its 52-week high Conclusion Interest rate cuts offer a glimmer of hope for Canadians and businesses. While the future remains uncertain, investors should not wait to invest. Rogers Communications presents a compelling option for those seeking to capitalize on potential low interest rates in the future.
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After the recent rate cut, many investors may be relieved that the economy is finally at a point where central banks are starting to slow down. Higher interest rates have hurt everyone from consumers with huge debts to publicly traded companies and their investors.
As more rate cuts come, Canadians, burdened with high household debt, have plenty of reason to cheer on central banks.
The Bank of Canada and the U.S. Federal Reserve have been aggressively raising interest rates in recent years in response to rising inflation. Now that inflation is finally cooling, we may be in a declining interest rate environment that could make life a little easier for everyone.
When will there be more interest rate cuts?
If you are a new investor waiting for further rate cuts to take advantage of the next bull marketBe warned: things won’t be smooth sailing for the foreseeable future. While there will certainly be more interest rates coming, it is impossible to know how much and how aggressive they will be this year. It may take several years before central banks take more action, and we don’t know where they will settle in the coming years.
The fact that the inflationary environment could return again means a lot more market volatility forward. The Bank of Canada has set a target inflation range of 2%, but there is always a chance that inflation could rise again. Even if we see inflation rates below 2% in the distant future, you should not wait to invest until then.
To make the most of your position as an investor in the stock market, it is best to invest now and prepare your portfolio for growth when a period of low interest rates eventually arrives that will allow your portfolio to grow again.
A dividend stock that can be the perfect low interest rate
While pre-COVID interest rates may 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 that are significantly affected by the financial burden of high interest rates may find lower interest rates a welcome sight.
Lower interest rates can lead to affordable capital expenditures, better cash flows and higher profitability. Rogers Communications (TSX:RCI.B) is one of those ailing stocks that you can consider investing in right now. RCI stock is a communications and media company with a market capitalization of $28.10 billion and headquartered in Toronto.
After the merger with Shaw Communications, Rogers Communications is better positioned to provide more competition to the market leaders in the telecom sector in Canada. A merger also means savings and a larger market share. Combined with lower costs due to falling interest rates, it could provide much more value for investors in the coming years.
Stupid takeaway
At the time of writing, shares of Rogers Communications are trading at $51.67 per share and offering a dividend yield of 3.87%. Down 20.15% from its 52-week high, which could be a bargain for your portfolio at current levels.
