Over the past couple of years, one of the biggest questions in financial markets has been when are interest rates going to rise. Interest rates have been at a record low for 6 years now and there is no sign of an increase in the rate.
This low interest rate has left savers devastated and some have deserted the high street savings accounts for higher yielding p2p lenders. Others have invested their money in the stock market as the dividends they receive 3%-5% is far greater than the 1%-2% they currently receive from their banks.
So what should you do if you expect interest rates to stay at a low levels for longer? You should invest that money in the stock market. But I am not saying you should invest in any old company or sector. Look for industries industries that benefit from low interest rates.
One great sector to invest in when interest rates are low is the utilities sector. Utilities are characterized by their high debt levels and thus benefit most when the cost of their debt is lowest i.e. low interest rates. So low interest rates mean higher profits for utility companies.
Utility companies are also very steady dividend payers. Yields of 3%-5% can easily be found on most utility company stocks This should give you added incentive to invest in the utility sector.
So if you are expecting low Interest rates for longer, invest in the utilities sector. Whilst I don’t normally give stock tips, some great stocks to buy in this sector are BT Group Plc, Telefonica SA, and RWE AG.