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.

One Day Settlement or T+1

 

On Monday, the 27th of May, 2024 ... the settlement for stock buy and sell transactions will change from 2 days to 1. In the US it will happen on Tuesday the 28th of May.

Probably in the future with the technology and more than likely AI added in, it will be same day settlements. I'm sure Day Traders welcome the change. Moving money in and out of the Markets faster. 

For me, where I'll be in the long term monthly Build or Accumulation stage for some time to come and may always be, I like the faster settlement process as well.

June will be another busy month with several stocks on my hit list and I'll add a couple of stocks from my Watchlist such as Capital Power (CPX-T). 

Energy and Pipelines are trendy this year so far and Suncor (SU-T) is in the middle of it plus SU owns gas stations Canada wide with fast charging for the EVs. There's recent news about new President, Rich Kruger joining in 2023 making a positive impact on the company. The stock price is up near 30% year to date with a 4% yield.

Pembina Pipelines (PPL-T) has an ex-dividend date of June 14th with a current yield of 5.36%. Holding me back from adding now is that the stock is overvalued currently but increased it's quarterly cash dividend so that's enticing. I'll check PPL when closer to June 14th.

TRP-T or TC Energy with it's focus on moving natural gas through it's pipelines and internationally such as shipping to Asia from it's new plant/port in BC has a Market Cap of 54 billion and a yield north of 7%. The pipeline is of interest in the last half of June to further buy.

Highly regulated and more environmental hurdles to build future pipelines will make it increasingly expensive plus all the red tape involved so it would make sense that exciting pipelines will become more valuable in the future. 

A recent post I read got me interested in "Low Volatility" stock holdings within an ETF such as BMO's ZLB plus decent performance growth to boot. The top ten in holdings are all worthy being in my portfolio with Fortis (FTS-T) being the one I currently own. More on that in my next post where it's about stocks that don't tumble in price so much during the downward moves in the Markets and bounce back quicker depending on the sector.