6 TSX stocks to buy as BoC raises interest rates to 3.25%

Be the First to Comment Read

6 TSX stocks to buy as BoC raises interest rates to 3.25%

Follow us on Google News:
 6 TSX stocks to buy as BoC raises interest rates to 3.25%
Image source: © 2022 Kalkine Media®

Highlights

  • On Thursday, September 7, the Bank of Canada announced increasing interest rate by 75 basis points to 3.25 per cent
  • Sun Life Financial will distribute C$ 0.69 as a quarterly dividend on September 29
  • Tourmaline stock swelled by approximately 135 per cent in a year

Canadian investors worried about increasing interest rates can consider exploring dividend stocks like Sun Life (TSX: SLF), BCE (TSX: BCE), Canadian National (TSX: CNR) etc., which regularly doles out dividends.

On Thursday, September 7, the Bank of Canada (BoC) announced increasing the interest rate by 75 basis points to 3.25 per cent as Canada’s labour markets remain ‘tight’. The central bank said it would take necessary actions to maintain price stability and push back inflation to a two per cent target. Hence, considering dividend-paying stocks supported by solid businesses could help investors boost their portfolio income and healthy returns.

So, Kalkine Media® has selected the following dividend-paying large-cap stocks that one can explore amid the ongoing economic environment.

1.     Sun Life Financial Inc (TSX: SLF)

Sun Life Financial reported insurance sales of C$ 736 million in Q2 2022, relatively up from C$ 710 million in the second quarter last year. Sun Life’s wealth sales and asset management growth flow also improved to C$ 57.37 billion in the latest quarter, higher than C$ 55.01 billion in the same period a year earlier. The financial service provider also posted a financial leverage ratio of 25.7 per cent at the end of Q2 2022 than 24.7 per cent in the previous year.

Though Sun Life reported a reduced net profit of C$ 785 million in the second quarter this year (than C$ 900 million in Q2 2021), its underlying net income grew to C$ 892 million in Q2 2022 compared to C$ 883 million in Q2 2021. Sun Life Financial will distribute C$ 0.69 as a quarterly dividend on September 29.

Sun Life stock was down by over 22 per cent from a 52-week high of C$ 74.22 hit on February 2. The SLF stock dropped by over 18 per cent year-to-date (YTD). As per Refinitiv information, the SLF stock saw a Relative Strength Index (RSI) value of 39.15 on September 7, up from the oversold level of 30.

2.     BCE Inc (TSX: BCE)

Internet service company BCE could be an option for low-risk investors looking for defensive stocks. BCE has been among the top blue-chip companies paying a dividend since 1987. The fifth generation (5G) internet service provider is set to deliver a quarterly dividend of C$ 0.92 on October 15.

On September 2, BCE announced a strategic agreement where Distributel, a Canadian communication service company, has been operating since 1988. Under the acquisition agreement, subject to regulatory approvals, Distributel intends to join the Bell group of companies to support expanding its internet services across residential and business segments.

BCE stock shot down by nearly 15 per cent from a 52-week high of C$ 74.09 clocked on April 20. On September 7, the BCE stock recorded an RSI value of 39.74, according to Refinitiv.

3.     Canadian National Railway Company (TSX: CNR)

Canadian National Railway is a C$ 106.28 billion market capitalization company providing railroad transportation services. Canadian National is set to dole out a quarterly dividend of C$ 0.73 on September 29. The large-cap railway operator reported a top-line increase of 21 per cent year-over-year (YoY) to C$ 4.34 billion in the second quarter of 2022. Canadian National Railway noted net earnings of C$ 1.32 billion in Q2 2022 relative to C$ 1.03 billion in the same quarter last year.

Canadian National stock spiked by over seven per cent quarter-to-date (QTD). The CNR stock had an RSI value of 43.37 on September 7, indicating moderate momentum.

Kalkine selects SLF to PPL: 6 TSX stocks to buy as rate rises to 3.25%©Kalkine Media®; ©Garis Studio via Canva.com

4.     Canadian Imperial Bank of Commerce (TSX: CM)

Canadian Imperial Bank, commonly known as CIBC, also lifted its prime lending rate by 75 basis points to 5.45 per cent on the back of the central bank’s rate hike decision. CIBC will also pay C$ 0.83 as a quarterly dividend on October 28.

On the financial front, Canadian Imperial posted net earnings of C$ 1.66 billion in the third quarter of fiscal 2022, comparatively low from C$ 1.73 billion in Q2 2022. In the latest quarter, the lender posted C$ 243 million in provision for credit losses, including on performing loans and impaired loans.

Canadian Imperial stock slipped by over 15 per cent in 12 months. Based on Refinitiv data, the CM stock noted an RSI value of 33.91 on September 7, marginally surpassing the oversold mark (30 levels).

5.     Tourmaline Oil Corp (TSX: TOU)

Tourmaline Oil reported a cash flow of C$ 1.35 billion in Q2 2022, a 137 per cent increase from the cash flow of C$ 570.23 million posted in the same quarter a year ago. Tourmaline will distribute a quarterly dividend of C$ 0.225 on September 29. Besides the quarterly dividend, the oil producer also delivered a special dividend of C$ 2 on August 12 as its free cash flow (FCF) amounted to C$ 1.1 billion in the second quarter this year.

Tourmaline stock swelled by approximately 135 per cent in a year. As per Refinitiv findings, the TOU stock’s RSI value stood at 52.39 on September 7, with a trading volume of 1.33 million.

6.     Pembina Pipeline Corporation (TSX: PPL)

Pembina Pipeline is a C$ 25.18 billion market capitalization midstream company with energy infrastructure, including pipelines, gas gathering and assets for storage and exports. Pembina distributes monthly dividends (presently, C$ 0.21 per share). Pembina reported C$ 3.09 billion of revenue in Q2 2022, comparatively high from C$ 1.9 billion in the same quarter a year ago.

Pembina Pipeline stock rose by over 18 per cent in 2022. As per Refinitiv inflation, the PPL stock had an RSI value of 34.52 on September 7, with nearly 1.67 PPL shares switching hands.

Bottom line

Quality dividend stocks like the large-cap stocks discussed here could ensure a steady inflow of passive income even amid the prevailing market environment where the central bank utilizes policy rates to ease inflationary pressure. These stocks are backed by sound business operations and could offer stable returns over a long duration.

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

Disclaimer

Featured Articles

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK