Over the past five years, BCE Inc. (TSX:BCE)(NYSE:BCE) has rewarded long-term shareholders very well and the stock’s recent pullback is finally giving new investors a chance to buy the company at a reasonable price.

Here’s why dividend fans should consider adding the stock to their portfolios while the yield is still close to 5%.

Diverse revenue streams

BCE operates in three core segments: wireless, wireline, and media.

In Q1 2015, the wireless group delivered year-over-year operating revenue growth of 9.7% supported by a 24.4% increase in data revenue. The strong results were driven by growing smartphone use.

BCE’s product revenue also jumped by more than 35% in the first quarter compared to the same period last year as more people bought premium mobile devices. You have to like a company that can make money on the upgrade to new equipment and then rake in a bunch more on higher service charges. Wireless adjusted EBITDA for Q1 was $712 million on operating revenue of $1.64 billion.

On the wireline side, BCE is doing well with its broadband Internet and TV subscription offerings. The FibeTV and FibreOP TV products are resonating well with customers who want Internet-based TV services. The company has more than 1 million IPTV customers and BCE is now the second-largest television service provider in the country with more than 2.6 million subscribers. Wireline adjusted EBITDA for Q1 was $1.24 billion on operating revenue of $3 billion.

The media group is a bit of a bird’s nest. The company owns a television network, specialty channels, radio stations, sports franchises, and a large portfolio of websites. BCE added most of its media assets in the past five years and the company is still in the process of getting all the properties working together in a streamlined operation.

Audiences want 24/7 access to content across a variety of platforms and BCE has the capabilities to meet the demand. Media revenues are rising but the challenge lies in convincing advertisers to spend more money. BCE is working hard at improving efficiency across the media portfolio and that will help drive media margins higher in the coming years, but the company has to do a better job on the revenue side. Media adjusted EBITDA for Q1 was $141 million on operating revenue of $726 million.

Barriers to entry

Once in a while the market gets worried that an international giant could come into Canada and compete with BCE and its peers. This is very unlikely given the investment that would be required to battle for a market of just 36 million people.

Telecom companies have to invest billions to build, maintain, and upgrade the state-of-the art infrastructure needed to deliver world-class service. Canada is simply too big a country for someone to start from scratch.

BCE is staying ahead of the pack by running new high-speed fibre to its customers’ homes. The company plans to invest $20 billion in the next five years, and that’s on top of the tens of billions already spent to build the core network.

Outsiders won’t take on the risk and few domestic players can raise that kind of cash.

Dividend growth

BCE raised its dividend by 5% earlier this year. The current payout of $2.60 per share yields about 4.9%. The company expects free cash flow to grow by 8-15% in 2015 and investors should see dividend growth continue.

Should you buy BCE Inc.?

The market is serving up a lot of big dividends but most of those are paid by resource companies facing difficult markets for their products. BCE has size, scale, an integrated model, and few true competitors. That’s exactly the type of company long-term dividend investors want to buy.

Don't miss our #1 dividend-growth stock for 2015!

BCE has a strong history of dividend growth but our top analysts have recently discovered one TOP dividend-growth stock that is even better in 2015.

Today, you can download the name, ticker symbol, and price guidance absolutely FREE.

That's right, simply click here now to receive your Special FREE Report, "1 Top Dividend-Growth Stock for 2015 -- and Beyond."


Let’s not beat around the bush – energy companies performed miserably in 2015. Yet, even though the carnage was widespread, not all energy-related businesses were equally affected.

We've identified an energy company we think offers one of the best growth opportunities around. While this company is largely tied to the production of natural gas, it doesn't actually produce the gas. Instead, it provides the equipment required to get natural gas from the ground to the end user. With diversified operations around the globe, we think it's a rare find in the industry.

We like it so much, we’ve named it as 1 Top Stock for 2016 and Beyond. To find out why, simply enter your email address below to claim your FREE copy of this brand new report, "1 Top Stock for 2016 and Beyond"!

Fool contributor Andrew Walker has no position in any stocks mentioned.