Seven stocks with growing dividends that will benefit from rate cuts

What are we looking for?

Canadian dividend-growing stocks that will benefit from future Bank of Canada interest rate cuts.

The screen

After holding its policy rate steady at 2.75 per cent in June, the Bank of Canada may be compelled to cut rates later this year. With inflation cooling and economic growth under threat from U.S. tariffs, some major banks such as Toronto-Dominion Bank (TD-T) are forecasting two rate cuts by year end.

Falling rates tend to boost demand for income-generating assets, making this an opportune moment to revisit dividend stocks. Lower bond yields push investors toward equities that pay steady and growing dividends.

Using FactSet’s screening tool, I identified Canadian dividend growers with a proven track record by applying the following criteria:

• Market capitalization greater than $1-billion
• Dividend yield greater than 3.5 per cent
• Three consecutive years of dividend increases (2022 to 2024), and a forecasted increase in 2025
• Dividend payout ratio of less than 50 per cent, minimizing the risk of a dividend cut
• Member of the S&P/TSX Composite Index

The seven companies that passed were ranked by their dividend yield.

What we found

CT Real Estate Investment Trust (CRT-UN-T), a Canadian REIT with a portfolio of essential properties that includes Canadian Tire, ranked first on our screen with a 6-per-cent dividend yield and a conservative payout ratio of 49.6 per cent. Its properties maintain a strong occupancy rate above 99 per cent, adding a layer of predictability to its robust cash flows. Recent financing moves, including a $200‑million debenture offering, help support further development initiatives. With long-term leases, minimal tenant turnover risk and rates poised to drop, CT REIT is well positioned as a dependable income name in a lower-rate environment. Investors should stay tuned for further updates on CT REIT’s earnings call on Aug. 6.

Cogeco Communications Inc. (CCA-T), a telecom and broadband provider that operates across Canada and the United States, offers a 5.6-per-cent dividend yield and low payout ratio of 43.4 per cent. Despite reporting a recent 2.7-per-cent decline in quarterly revenues year-over-year, the company delivered a 63-per-cent surge in free cash flow driven by lower capital expenditures and restructuring costs. That said, Cogeco’s core business is cable, which is in a long-term decline. It’s a steady, income-focused name that may appeal more to conservative investors in a falling-rate environment.

The information in this article is not investment advice. The author assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained above.

Arjun Deiva, CFA, is an MBA Candidate at the University of California, Berkeley, Haas School of Business.