Editor’s Note: Please see our analysis of the latest earnings from our Dividend Champions in the Portfolio Update section following the article below.

Investors hate uncertainty. The proof is the apparent relief with which the market rallied on Wednesday after the U.S. Federal Reserve finally consummated its year-long flirtation with moving off the zero bound.

The Fed may have raised the cost of money, but that was already priced into the market. Instead, stocks were soothed by the Fed’s largely dovish tone, including the reiteration that tightening would be gradual.

Central bank chief Janet Yellen tried to keep all options open for the future direction of monetary policy, acknowledging that global headwinds, both known and unknown, could force the Fed to move more slowly or even revert to easing.

However, the so-called dot plot, which depicts the anonymous predictions of members of the central bank’s Federal Open Market Committee, shows that most expect the federal funds rate will be at 1.375% by the end of 2016, suggesting that more rate hikes are on the way.

This dovetails with the Fed’s cautious optimism about the pace of U.S. economic growth, as well as progress toward achieving its twin mandates of targeting inflation at 2% and spurring full employment. And the market appreciated this relatively sunny outlook, since another deferral would have implied the central bank was seeing cracks in the economy.

Even the Canadian benchmark S&P/TSX Composite Index rose in afternoon trading, ending Wednesday’s market session 1.9% higher.

Why would the Canadian stock market rally in response to the U.S. central bank’s action? There are two main reasons.

The most obvious is that a rate rise signals that U.S. growth is headed in the right direction. The U.S. is a top destination for Canadian goods, absorbing about three-quarters of its neighbor’s exports. So a growing U.S. economy augurs well for growing U.S. demand for Canadian goods.

The other reason is also tied to cross-border trade: A falling exchange rate makes Canadian goods more affordable and, therefore, more competitive in the U.S. market.

Following the Fed’s latest move, the Canadian dollar now trades just below US$0.72, its lowest level in 11 years.

And the loonie looks likely to hit US$0.70 in the months ahead, especially if the Fed continues raising rates. That level would provide a very attractive entry point for long-term U.S. investors.

In fact, foreign investors are starting to see value in Canadian stocks again. After significant summer outflows, foreign investors poured C$6.7 billion into Canadian equities in September and October. Inflows during those two months accounted for more than three-quarters of the year-to-date total, according to Statistics Canada.

Although historically the Bank of Canada (BoC) has followed the Fed’s cues, the two central banks don’t always march in lockstep. And their current divergence in policymaking is a big part of the loonie’s slide back below parity with the U.S. dollar over the past few years—the other part, of course, is the economic shock resulting from the crash in crude oil prices.

At first glance, it might seem odd that the Canadian dollar should already be discounted so heavily against the greenback. After all, even after two rate cuts, Canada’s benchmark overnight rate is at 0.50%, with the effective rate likely being somewhat higher than the midpoint of the federal funds rate’s new targeted range of 0.25% to 0.50%.

But it’s the overall trajectory of monetary policy that matters. And right now, a majority of traders are betting that the federal funds rate will be at least 0.75% by the end of 2016. By contrast, the market expects at least one more rate cut from the BoC by December of next year. That should keep pressure on the loonie.

Export-oriented industries will benefit from a lower exchange rate, especially when U.S. dollar-denominated sales are translated back into loonies. And that’s why Canadian investors were smiling yesterday.

During last week’s Live Web Chat for Canadian Edge, Chief Investment Strategist Deon Vernooy detailed his top investment themes for 2016. If you missed it, you can still read the transcript.

The Dividend Champions: Portfolio Update

By Deon Vernooy

BCE Inc. (TSX: BCE, NYSE: BCE) has completed the issuance of 15.1 million shares at C$57.10 in a bought deal that raised C$862 million for the company. Management says the proceeds will be used to reduce debt and to strengthen the balance sheet.

At the same time, BCE announced that it plans to redeem $700 million of debentures maturing in early 2016. These debentures carry interest rates between 3.65% and 4.64%.

The newly issued shares will increase the share count by 2%, which would cause a minor dilution for shareholders. However, the company has now increased its share count by 11.4% since December 2013. We find this somewhat concerning, as the cost of equity is higher than the cost of debt for BCE.

Nevertheless, during the past two years, heavy capital expenditures, spectrum fees and several acquisitions required substantial capital. In order to maintain a sound balance sheet, BCE had little choice but to increase the share capital despite very strong cash flow.

On a pro-forma basis, the debt-to-capital ratio will reduce to around 54% after the equity capital raising. We consider this a reasonable level for a business with a stable revenue stream.

The dividend yield on BCE is now an attractive 4.7%, and we estimate the fair value at C$66/US$48. The stock remains one of our largest holdings in the Dividend Champions Portfolio.

North West Company Inc. (TSX: NWC, OTC: NWTUF) reported earnings per share for the third quarter, 16% higher than the previous year. The quarterly dividend was increased by 7%, to C$0.31 per share.

Revenue increased by 11% and EBITDA (earnings before interest, taxation, depreciation and amortization) rose by 14% compared to the previous year, as same-store food sales improved markedly in Canada, Alaska and the Caribbean. General merchandise sales in Canada declined as the warm weather hurt seasonal sales.

The company also indicated that it will be increasing and extending its capital expenditure program to increase store productivity in its top 42 markets. This program, which started in 2014, is expected to generate higher same-store earnings growth and will require more investment in store recruiting and training expense, combined with slightly higher annual capital spending in the C$65 million range until 2018.

The company has a solid balance sheet with a debt-to-capital ratio of 35%. And ample cash flow covers capital expenditures and the dividend. These factors provide comfort that the dividend will not come under any pressure as a result of the capital expenditure program, although dividend growth may be curtailed until 2018.

North West Company remains reasonably priced, with a dividend yield of 4.4% and a fair value estimate of C$30/US$22. We are comfortable holding this stock in the Dividend Champions Portfolio.

Our winter visit to Whistler Blackcomb (TSX: WB, OTC: WSBHF) over the past few days did not disappoint. The weather was beautiful, the snow plentiful and the whole village abuzz with excitement for a ski season that started well.

Whistler makes all of its profits during the peak ski season, which is reflected in the results of the quarters that end in December and March of each year. The other two quarters normally deliver substantial losses because the summer activities around the mountains are not adequate to cover the considerable operating costs during those quarters.

The September quarterly results, which were reported on Dec. 12, delivered no surprise, with a net loss of C$0.16 per share, which was the same as the previous year. An increase in more profitable summer activities remains a challenge for the company.

For the full financial year, which also ends in September, the results were somewhat disappointing, with diluted earnings per share almost unchanged, and total skier and other visits down by 4.3%, as poor snowfall discouraged local and regional visitors. The dividend was maintained at C$0.98 per share for the full year.

All eyes are now on the new ski season which started well, with much better snowfall than last year and strong hotel and activity bookings. Consensus estimates indicate a 60% jump in earnings per share for the 2016 financial year. Whether this proves to be correct will be known within the next few weeks as the ski-season unfolds.

The stock is not cheap at current price levels and exceeds our fair value estimate of C$21/US$16.

The dividend yield is 4.1%, with limited growth prospects. We are satisfied holders of the stock in the Dividend Champions Portfolio, with a total return of 26% since we first added the company to the portfolio. We will remain invested until the benefits of the weak Canadian dollar and hopefully a much-improved ski season are fully reflected in the company’s share price.