This Dividend Stock Has Been a Beast in a Dovish Rate Environment

Cogeco Communications (TSX:CCA) is a Montreal-based telecommunications company. Shares of Cogeco have surged 35.5% in 2019 as of close on April 29. The stock has climbed 29% from the prior year.

Telecoms, utilities, and other income-focused vehicles like REITs have performed well in 2019. These assets were strained by the tightening rate environment as income investors fled to bonds, but the policy U-turn from central banks has caused these equities to fall back into favour.

Cogeco and other telecoms are a great target as a rate hike from the Bank of Canada appears very unlikely in 2019, and perhaps in 2020 as well.

Softening rate policy is not the only reason Cogeco has had success in 2019. In the first two months of fiscal 2019 Cogeco has posted revenue of $1.21 billion compared to $1.07 billion in the prior year.

Adjusted EBITDA has increased 14.8% year-over-year to $561 million. Revenue jumped in the second quarter of fiscal 2019 largely on the back of Cogeco’s acquisition of MetroCast cable systems.

Cogeco declared a quarterly dividend of $0.43 per share in Q2 fiscal 2019, compared to a dividend payout of $0.39 at the same time in fiscal 2018. This represents a modest 1.9% yield.

Cogeco has posted dividend-growth for 15 consecutive years. The stock offers a nice combination of growth and income as investors can expect continued dovishness from central banks in 2019.