Interest Rates in June, 2024

 

The Bank of Canada lowered the interest rate by a quarter percent this past week with hopefully, more cuts to come this year. As a DIY investor it will take awhile for some of my stocks to possibly make some price gains that have high operational expenses and loans/debt financing with the higher than usual interest rates attached these days.

Utilities and telecoms come to mind and where I'm a fan of energy stocks ... pipelines.

The Banks in Canada were and are still prepared for the personal and business loans that default with millions worth increasing month by month this year plus the regulatory fines that come up from time to time with TD bracing for a huge fine they are expecting from their US branches allowing money laundering via bribed tellers.

It's all happened before with more than usual high interest unpaid credit with rules in place that the Banks have to follow so extra funds are in place for these times.

I like low volatility stocks where there are no big surprises in my holdings. However, it happens where a company has to make moves when their debt gets too high like BCE with it's price dropping to a 52 week low of $44 and slowly rebounding so far in 2024. There's been chatter about BCE maintaining it's dividend growth expectations. I won't buy more BCE until I can see improvement ahead in their earning reports which could happen going into 2025.

As I mentioned in my last article, BMO's ZLB seems to be the favoured ETF that holds low volatility stocks. Most ETF providers carry their own versions of low volatility stocks and some pay higher distributions. Grocery stocks head the top ten with Loblaw and Metro currently where profits pile up while the consumer like me, grumbles about the high price of groceries. ZLB's ex-dividend date is June 27, 2024 and distributions are paid on July 3rd.

                                                     Courtesy of CBC Radio Canada

Where there are decent gains, usually the distribution or dividend percentage is lower like index related ETFs such as XIU at a current yield of 3.04% but looking at the 1 and 5 year chart for growth ... nice.  In comparison, the top tech stocks in the US are the rave these days with some now adding a dividend although ridiculously low compared to the money they rake in but it's a bonus never the less.

Hydro One (H), a utility more to my liking and in the top ten holdings in ZLB, increased it's dividend by 6% with reasonable growth and has an ex-dividend date of  June 12, 2024. I prefer "no management fee" individual stocks but to gain a cluster of some of the top Canadian stocks, a 0.39% MER fee with ZLB is an option I like as well.

Pipelines ... TRP or TC Energy, having an ex-dividend date in the latter half of June is heading into a company split of assets and more on that in my next article. Meanwhile, information about the shares and dividends is a good post about TRP with chart on Your Ever Growing Income.