2 Rising Dividend-Growth Stocks I’d Buy With an Extra $10,000

Here’s why BCE Inc. (TSX:BCE)(NYSE:BCE) and Metro Inc. (TSX:MRU) are attractive picks.

| More on:
The Motley Fool

Investors are often on the lookout for beaten-up names that might offer a shot at some big capital gains, but those bets can be risky, and a “cheap” stock sometimes becomes a lot cheaper before it bottoms out.

Here are the reasons why I think BCE Inc. (TSX:BCE)(NYSE:BCE) and Metro Inc. (TSX:MRU) are worth a look despite their recent gains.

BCE

BCE is on a roll. The stock just topped $60 per share and has more than doubled since the financial crisis.

Some analysts say the company is expensive and the flight to safe names will eventually unwind, but BCE remains a compelling long-term bet even at the current price.

Through a string of strategic acquisitions, the company has expanded from its telecom roots to become a communications and media powerhouse. BCE owns sports franchises, a television network, retail stores, radio stations, popular web portals, specialty channels, and an advertising business.

When you combine these assets with the world-class mobile and wireline infrastructure, you get a business that is so well entrenched all along the value chain in the Canadian market that it should dominate the sector for decades.

That might not impress consumers, but it is great news for investors.

BCE continues to invest billion in its infrastructure and the company’s roll-out of high-speed fiber to Canadian homes should give it an added advantage over its competition.

The business generates a ton of free cash flow and BCE hikes the dividend on a regular basis. The stock isn’t cheap at 20 times earnings, but investors who buy today can get a solid 4.5% yield from one of the safest bets in the market.

Metro

If you live in Ontario or Quebec, the odds are pretty good that you put a bit of cash into the pockets of Metro’s investors every week.

The company operates pharmacies and grocery stores in the two provinces and has done a great job of fending off competition while driving revenue and earnings higher.

Metro reported fiscal Q1 2016 net earnings of $139.8 million, up 24.3% compared with the same period last year. Sales rose 4.3% and the company recently declared a quarterly dividend of $0.14 per share, up 20% from a year ago.

Metro is a great holding because it sells the daily necessities of life, which means the business should continue to do well even if the economy goes into a nose dive. The company has both premium and discount stores that capture the market at all income levels, and people still have to eat and take their medication regardless of their financial situation.

Investors shouldn’t be put off by the 1.3% yield because the dividend-growth rate is substantial and shareholders have enjoyed a respectable 165% gain in the stock price over the past five years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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

More on Dividend Stocks

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »

Payday ringed on a calendar
Dividend Stocks

3 Dividend Stocks That Pay Me More Than $54.57 Per Month

These three dividend stocks have done me well over the years, so let's look at how much I've gotten in…

Read more »

Golden crown on a red velvet background
Dividend Stocks

Dividend Royalty: 3 Fabulous Stocks to Buy Now for Decades of Passive Income

Rogers Communications stock and Canadian Natural Resources stock could pay you dividends for decades to come.

Read more »