3 Stocks That Could Skyrocket With a Low Canadian Dollar

If the Canadian dollar continues to fall, then stocks like Algonquin Power and Utilities Corp (TSX:AQN)(NYSE:AQN) could rise.

| More on:

Are you convinced that the Canadian dollar (CAD) is heading lower?

If your answer is yes, then there may never be a better time than now to get into TSX stocks.

Although a lower CAD makes imported products more expensive, it’s also great for Canadian exporters. The lower the CAD goes, the easier time Canadian export companies have moving goods into the U.S.

Further, U.S. dollars convert to 1.34 CAD right now, so Canadian companies’ U.S. earnings increase when reported in CAD.

There’s no denying that you’ll take a hit if you take a vacation in the states or buy U.S. goods at the store today. However, if you’re buying Canadian stocks that export to or operate in the U.S., you’re sitting pretty.

Not only is the CAD low against the greenback right now, CIBC is predicting it will go lower. Assuming that prediction is correct, then the three stocks below are set to soar.

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN)

Algonquin is an Ontario-based utility that owns many assets in the U.S.

Algonquin distributes water in five U.S. states, sells electricity in six, and sells LNG in another six. With approximately 758,000 American connections across its three segments, this company rakes in a tonne of greenback quarter after quarter. Beyond that, the stock pays a dividend that yields 4.5%, so if it’s income you’re after, Algonquin could be a great play.

Fortis (TSX:FTS)(NYSE:FTS)

Continuing with the utilities theme, Fortis is another big one that owns loads of U.S. assets.

Specifically, the company has a network of electricity companies called ITC Holdings that operates in Minnesota, Michigan, Iowa, Illinois, Missouri, and Oklahoma. In 2018, ITC earned $361 million in net income, contributing about one-third of Fortis’s total earnings. That’s a lot of U.S. dollars, contributing significantly to Fortis’s overall strong results. Like Algonquin, Fortis pays a generous dividend, yielding about 3.6% at the moment. Fortis has an uninterrupted 45-year track record of increasing its dividend, so you can expect that yield to rise over time.

Canadian Pacific Railway (TSX:CP)(NYSE:CP)

Last but not least, we have Canadian Pacific Railway. As a freight transport company, it earns most of its money shipping goods around Western Canada. However, part of its line runs through the U.S., and there the company earns money in U.S dollars. Given the trade tensions between Canada and the U.S. right now, some of Canadian Pacific’s business may be impacted by tariffs. However, so far, the favourable exchange rate has played a much larger role in the company’s growth, driving significantly higher revenue in CAD terms than would otherwise be the case.

Partially because of its strong U.S. sales, Canadian Pacific is growing revenue at a solid 17% year over year. The company also pays a dividend, and while the yield is low at 0.94%, it’s ultra-safe thanks to the 18% payout ratio.

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 Andrew Button has no position in any of the stocks mentioned.

More on Dividend Stocks

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Boost Your Passive Income: 2 Canadian High-Yielders at a Bargain

Nutrien (TSX:NTR) stock and another play that appear like fantastic dividend bargains in mid-November.

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

TSX Stocks Soaring Higher With No Signs of Slowing

Three TSX stocks continue to beat the market and could soar higher in an improving investment landscape.

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

Here’s the Average TFSA Balance at Age 44 in Canada

You can invest your TFSA in funds like the BMO Canadian High Yield Dividend ETF (TSX:ZDV) to grow the balance.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

The Best Telecom Stock to Buy Before 2025

Choosing the safest stock from a decimated sector can be tricky, but if there is a reasonable chance of full…

Read more »