The Motley Fool

2 Dividends to Watch: BCE Inc. and Potash Corp./Saskatchewan Inc.

BCE Inc. (TSX:BCE)(NYSE:BCE) and Potash Corp./Saskatchewan Inc. (TSX:POT)(NYSE:POT) recently reported strong earnings and increased their dividends, but the stocks are on the slide.

Here are some reasons for the recent weakness in the shares and why this could be a great buying opportunity.

BCE Inc.

Shares of Canada’s largest communications company are down nearly 10% since early February. The pullback has pushed the dividend yield up to 4.9%, and investors who have been watching the stock might want to consider getting in.

BCE continues to fortify its dominant position in the Canadian media and communications space. Over the past few years, the company has invested heavily in sports franchises, a television network, radio stations, and retail stores. This is in addition to the billions spent on the construction of a world-class distribution network.

The company’s wealth of content is now delivered to BCE’s customers via satellite, high-speed fibre, and wireless networks on every platform currently available in the market.

In fact, if you watch the news, listen to music, read an ad, shop online, text a friend, or catch up on the latest Canadian business developments, you will probably do so using at least one of BCE’s services.

Concerns about new competition are once again making the rounds, but the company is well positioned to defend its territory.

BCE Inc. trades at 15 times forward earnings and 4.1 times book, which is admittedly at the high end of its historic range. As long as interest rates remain low and dividends continue to rise, the stock should maintain the lofty valuation.

Potash Corp./Saskatchewan Inc.

Potash Corp. is one of those stocks investors can buy and truly forget about for decades.

As the global population continues to rise, farmland that should be used to grow food is being developed into suburban housing projects. This forces growers to squeeze more production out of less land, and Potash Corp. produces the crop nutrients needed to do this.

Global potash sales hit a record 61 million tonnes in 2014. The forecast for this year is 58-60 million tonnes, but the potash industry tends to be a bit volatile, and the final numbers could be higher. Regardless of the year-to-year variances, the long-term trend is obvious.

Potash Corp. earned US$1.82 per share in 2014 and expects that number to increase to US$1.90-2.20 this year. The company just raised the dividend by nearly 9%, and the 10-year annualized dividend-growth rate is an impressive 37%.

The stock has recently pulled back on concerns that a market-share war will depress prices in the near future. This is a short-term negative, but investors should look at the big picture when buying the company.

Potash Corp. is wrapping up a multi-year capital expansion at its facilities, and that means investors should see a significant boost to free cash flow that will be available for distributions and buybacks as the projects move from development to production.

Potash pays a dividend of US$1.52 per share that yields about 4.6%. The stock currently trades at 15 times forward earnings and 3.1 times book, which is reasonable when compared to its historical pattern.

What's the #1 dividend-growth stock to own in 2015?

BCE and Potash are great picks, but they are not the TOP pick in the market right now.

Our analysts have been ploughing through the numbers and have identified one TOP dividend-growth stock for 2015 and beyond. Today, you can download the name, ticker symbol, and price guidance absolutely FREE.

Simply click here now to receive your Special FREE Report, “1 Top Dividend-Growth Stock for 2015—and Beyond.”

Fool contributor Andrew Walker owns shares of Potash Corp.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.