Canadian stocks historically beat the market when the Bank of Canada began to cut interest rates, an event that will probably be repeated soon. Moreover, the gains from real estate, technology, energy, and utility stocks contributed to the lion’s share of Canada’s outperformance during previous periods of earlier Bank of Canada rate cuts. So, here are three Canadian stocks that you must invest in as the interest rate cuts continue.
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SmartCentres REIT
SmartCentres REIT (TSX:SRU.UN) is among Canada’s biggest fully integrated real estate investment trusts (REITs). It has a strong portfolio comprising more than 190 strategically located properties in every province of the country. The company owns 35.2 million square feet of income-producing, value-oriented retail space, which has an occupancy of 98.2%.
SmartCentres REIT’s new projects underway, such as residential and self-storage properties, offer additional growth potential that could contribute to future value and sustained dividend payouts. Moreover, with a price-to-book ratio of 1.25, the stock appears undervalued in its assets, providing a safety cushion for investors seeking to include a high-quality REIT in their portfolios.
Although the payout ratio is on the high side, the diversified portfolio and stable rental income of the trust provide comfort that the dividends are sustainable. Hence, if you seek a high-yielding opportunity with a solid track record and growth prospects, you can consider SmartCentres.
Fortis
Fortis (TSX:FTS) operates and owns 10 utility transmission and distribution assets in Canada and the United States, with nearly 3.4 million customers. It also holds interests in electricity generation with several Caribbean utilities. The consistent revenue stream of that business model allows Fortis to pursue growth initiatives while distributing a generous dividend.
Fortis Inc. aims to be one of the leading North American utilities to deliver a cleaner energy future. The regulated utility businesses continued by executing their financial and operational plans in the first half of 2024. On top of that, they are executing their annual US$ 4.8 billion capital plan and are confident in their US$25 billion five-year capital plan.
Fortis is dedicated to delivering shareholder value by rigorously executing its capital plan and maintaining a balanced, robust portfolio of top-tier, long-term, regulated utility businesses.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) operates a network of convenience stores in North America and Europe. The company has been doing exponentially better in terms of business and share price for the last few years.
It is expanding its operations in the United States, Canada, and other regions. Hence, this will help the company to increase its brand value and demand in the market, which will help to earn huge profits. The Circle K operator proposed taking over 7-Eleven owner Seven & i Holdings Co. with a much larger rival. It is one of the biggest takeovers and creates a network of around 100,000 convenience stores.
Through the merger, Alimentation Couche-Tard can become a leading company in the convenience store network, which will help it to amass enormous profits. However, such a merger will attract more investors to add this stock because it provides an ideal opportunity to grow capital. In addition, interest rate reductions tend to make bond-like proxies more appealing, making this company one of the best in this aspect.
