Source: Getty Images <\/p>\n
Written by Kay Ng<\/a> at The Motley Fool Canada<\/p>\n On Wednesday, the Bank of Canada (BoC) cut its benchmark interest rate by 0.25% to 2.5%, marking another step in its cautious stance amid signs of economic weakness. With second-quarter data showing contraction and a softening job market, economists expect at least one more 0.25% cut \u2014 potentially in October or December, according to Reuters.<\/p>\n For income-focused investors, this move is a signal. As fixed-income investments like guaranteed investment certificates (GICs)<\/a> lose their edge, capital tends to flow into higher-yielding equities. And for businesses carrying significant debt, lower interest rates can mean reduced borrowing costs and stronger balance sheets.<\/p>\n Here are two high-yield income stocks that could benefit directly from this shift \u2014 and reward investors in the process.<\/p>\n As a Canadian renewable energy stock<\/a>, Northland Power\u2019s (TSX:NPI<\/a>) capital-intensive model makes it one of the biggest beneficiaries of falling interest rates. The company carries roughly $7 billion in total debt, with a debt-to-equity ratio of 1.7 and a debt-to-asset ratio of 51%. While manageable, its interest coverage ratio of 1.2 times suggests there\u2019s room for improvement \u2014 especially as rates decline.<\/p>\n Crucially, Northland is in growth mode. It has major international projects under construction or in development:<\/p>\n A 30.6% stake in the 1,022 MW Hai Long offshore wind project (Taiwan)<\/p>\n A 49% stake in the up to 1,140 MW Baltic Power project (Poland)<\/p>\n An 80 MW battery energy storage system (Alberta)<\/p>\n These projects, scheduled to come online between 2026 and 2027, could dramatically boost cash flow.<\/p>\n In the meantime, investors are compensated for their patience. At around $22 per share, Northland Power offers a solid 5.4% dividend yield, far outpacing the current 2.8% yield on a two-year GIC. Moreover, analyst consensus points to a potential 25% upside in the stock price over the next 12 months.<\/p>\n TELUS (TSX:T<\/a>), one of Canada\u2019s Big Three telecom companies, has quietly been outperforming its peers since the BoC started cutting rates in June 2024. With its high capital expenditures, TELUS is particularly sensitive to interest rate changes.<\/p>\n As of the second quarter, the company had a debt-to-equity ratio of 2.2 and a debt-to-asset ratio of 55%, while its trailing-12-month interest coverage ratio was 1.7. While not unusual in the telecom space, these numbers suggest the company should benefit from cheaper refinancing and borrowing costs going forward.<\/p>\n At under $22 per share at writing, TELUS offers a mouth-watering 7.6% dividend yield, making it a compelling option for income-hungry investors looking to beat inflation and GIC rates. With a stable business model, consistent cash flow, and lower interest rates, TELUS could be a cornerstone in an income portfolio.<\/p>\n The BoC\u2019s latest rate cut is a clear nudge toward equities, especially those offering reliable income. As fixed-income instruments continue to lose appeal, stocks like Northland Power and TELUS stand to gain not only from improved financial conditions but also from increased investor interest.<\/p>\n In a falling rate environment, income investing isn\u2019t just about collecting dividends \u2014 it\u2019s about capturing upside in the right companies at the right time.<\/p>\n The post Bank of Canada Cuts Interest Rates to 2.5%: 2 Income Stocks That Stand to Profit<\/a> appeared first on The Motley Fool Canada<\/a>.<\/p>\n Before you buy stock in Northland Power Inc., consider this:<\/p>\n The Motley Fool Stock Advisor Canada analyst team identified what they believe are the 15 best stocks for investors to buy now\u2026 and Northland Power Inc. wasn\u2019t one of them. The 15 stocks that made the cut could potentially produce monster returns in the coming years.<\/p>\n Consider MercadoLibre, which we first recommended on January 8, 2014 \u2026 if you invested $1,000 in the \u201ceBay of Latin America\u201d at the time of our recommendation, you\u2019d have $24,780.76!*<\/p>\n Now, it\u2019s worth noting Stock Advisor Canada\u2019s total average return is 101%* \u2013 a market-crushing outperformance compared to 66%* for the S&P\/TSX Composite Index. Don\u2019t miss out on our top 15 list, available when you join Stock Advisor Canada.<\/p>\n See the 15 Stocks <\/a><\/p>\n * Returns as of September 2nd, 2025<\/p>\n More reading<\/p>\n Fool contributor Kay Ng<\/a> has positions in Northland Power and TELUS. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy<\/a>.<\/p>\n 2025<\/p>\n","protected":false},"excerpt":{"rendered":"Source: Getty Images Written by Kay Ng at The Motley Fool Canada On Wednesday, the Bank of Canada…\n","protected":false},"author":2,"featured_media":156439,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[52,49,48,18182,82108,82107,10080,44,82106,12802],"class_list":["post-156438","post","type-post","status-publish","format-standard","has-post-thumbnail","category-canada","tag-bank-of-canada","tag-ca","tag-canada","tag-fool-canada","tag-income-stocks","tag-interest-coverage-ratio","tag-interest-rate","tag-news","tag-northland-power","tag-telus"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/156438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=156438"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/156438\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/156439"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=156438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=156438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=156438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}