As the market looks to broaden out, spreading some of the recent momentum across sectors that haven’t really done much in the first half, I’d look to keep it “boring” and simple with my next big TFSA (Tax-Free Savings Account) or RRSP (Registered Retirement Savings Plan) purchase.
Indeed, there’s still a lot of enthusiasm out there. Artificial intelligence (AI) has taken the world by storm, and its benefits could move across more than just the tech sector. Undoubtedly, a lot of lower-tech clients have a lot to gain from the continued rise of AI. The efficiency gains and other benefits could have the potential to be unprecedented.
Indeed, as with any technological or industrial revolution, there are a huge number of less-obvious winners. And they aren’t the ones you’d think of right off the bat. In this piece, we’ll have a look at two less-obvious, low-tech companies that could have room to run as the AI revolution takes hold over the next 10 years and beyond.
Both stocks are also quite cheap, with bountiful dividends that could keep on growing at a stellar pace over time. So, without further ado, please do consider the following one-stop-shop plays for investors seeking dividends and capital appreciation. And, of course, both firms may be able to hop aboard the AI bandwagon at some point in the distant future.
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CN Rail
First up, we have Canadian rail top dog CN Rail (TSX:CNR), my favourite railway on the continent. Undoubtedly, it’s been a rocky ride over the past few months, as investors contemplate how much damage a recession in Canada could bring to the financial results. CN Rail will feel the twists and turns in the tracks, as the downturn finally happens. It’s not immune to macro headwinds and will probably never be, given it’s essentially the lungs and heart of the economy.
Still, the economy will get beating at a fast pace again, likely when the recovery kicks off. And by then, you’ll want to have already owned shares of CN Rail stock. Undoubtedly, by the time it’s obvious (or more apparent) that the recovery is in full swing, CN Rail stock would have probably rallied quite a bit, bringing the price of admission way higher than it is currently.
Today, the stock yields a fat 2%. At 20 times trailing price to earnings, CNR seems like a no-brainer buy right here and now!
As CN looks to get back on the efficiency track, look for innovative technologies (AI included) to help CN improve its operating ratio (a great gauge for the rails).
Restaurant Brands International
Restaurant Brands International (TSX:QSR) is a Canadian fast-food firm behind Burger King, Popeyes Louisiana Kitchen, Firehouse Subs, and, of course, Canadian staple Tim Hortons. The stock has been in rally mode for quite a while now, thanks in part to the sales surge over at Burger King.
The company has found a sales-driving formula that works, and as it keeps investing money in the right places, I think it would be a mistake to bet against the powerful fast-food firm as it encounters a recession. Unlike most other firms, a recession may actually bode well for sales growth. As a result, I’m super optimistic that QSR stock can keep the good times going!
How do AI and innovation fit in? Look for QSR to get more creative with marketing campaigns in the future. Such campaigns could drive sales growth over the long term.
At $102 and change, the stock yields a nice 2.84%. I think the dividend is ripe for the picking!
