Will This Dividend Stock Still Go Down Easy After the USMCA?

Saputo Inc. (TSX:SAP) stock has plunged 13.8% over the past three months as of close on October 16. Shares received a bump following the announcement that Canada had agreed to a trade deal with the United States on September 30.

The United States-Mexico-Canada Agreement (USCMA) is expected to be ratified sometime in November or December.

Canada was forced to make several concessions to push a deal through. One of those concessions was allowing more U.S. access to the Canadian dairy market.

However, Canada did manage to stand its ground and avoid duty-free trade in dairy products which is what the U.S. side originally sought.

The Office of the U.S. Trade Representative said that Canada agreed to provide new tariff rate quotas for U.S. dairy products.

The result will reportedly be the U.S. gaining access to roughly 3.6% of the overall Canadian dairy market. The USTR has clarified that it will provide reciprocal access on a ton-for-ton basis for imports of Canadian dairy products through first-come, first-served tariff rate quotas.

Saputo has long advocated for a more liberal trade environment, though leadership has also pointed out that supply management has aided in the stability of its business.

The company may celebrate some of the incremental progress made, but it is unlikely to have a dramatic impact for either side. That means Saputo is still a solid defensive play, but its growth outlook will be muted.

Currently the stock offers a quarterly dividend of $0.165 per share representing a 1.6% dividend yield.