The Bank of Canada opted to hold interest rates into the New Year during its meeting on Wednesday, December 6. The move did not come as a surprise for analysts as the central bank had already urged caution in its last meeting citing concerns over NAFTA and consumer debt. However, the bank also struck a dovish tone in projecting rate hikes early in 2018.
The Canadian dollar sunk on the news. With the United States Federal Reserve expected to move forward with a rate hike next week, the Canadian dollar could fall further heading into 2018. Let’s look at two stocks that could benefit from this development.
Canadian National Railway Company (TSX:CNR)(NYSE:CNI) is a Montreal-based freight company. CNR stock has climbed 13.6% in 2017 and was up 0.94% at the top of the noon hour on December 7. In the third quarter the company posted net income of $958 million which was down from $972 million in Q3 2016.
Operating expenses rose 10% to $1.76 billion. The stock offers a dividend of $0.41 per share with a 1.6% dividend yield. Canadian rail and manufacturing companies should receive a boost with a lower dollar in 2018.
Canadian Pacific Railway Limited (TSX:CP)(NYSE:CP) is a Calgary-based rail company. Shares have increased 18.7% in 2017 and were up 1.64% at the bottom of the noon hour on December 7. In its most recent results CP Rail noted that the higher dollar had created headwinds for an otherwise positive quarter. The stock offers a modest dividend yield of 1%.