The Motley Fool

3 Reasons Why Rogers Communications Inc. Deserves a Spot in Your Dividend Portfolio

Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) shareholders must be getting pretty frustrated by now. Over the last couple of years, the company’s shares are down by more than 16%. Meanwhile, Telus Corporation and BCE Inc. have gained 24% and 18%, respectively.

So, does this mean dividend investors should dump Rogers? Well, not necessarily. Below we look at three reasons to continue collecting dividends from this company.

1. Still a telecom

Over the past few years, Rogers has struggled mightily. Customers have been losing patience, and many are leaving altogether. The government is ramping up regulations on telecom providers, hurting companies like Rogers in the process. Meanwhile, alternatives to subscription-based television are gaining popularity, hurting Rogers’ cable TV offering.

In most industries, this kind of story would spell disaster. But Rogers operates in a very secure industry, one where competition is limited and barriers to entry are high. Better yet, customers are often locked in multi-year contracts, so even if these people are upset, they won’t leave in droves.

If you don’t believe me, just look at Rogers’ numbers over the past three years. From 2012 to 2014, the company’s total revenue went from $12.5 billion to $12.7 billion to $12.9 billion. Clearly this is a very steady business, even during its toughest years. I can’t think of a better formula for a reliable dividend.

2. Some prized assets

Shareholders have gotten tired of seeing poor numbers from Rogers, and for good reason. That said, the company’s long-term prospects are much brighter.

Let’s start by looking at the wireless segment. About a year ago, Rogers paid over $3 billion in Canada’s 700 Mhz wireless spectrum auction. This spectrum was seen as critical for building out a powerful wireless network, since waves at this frequency are better-able to reach places like elevators and underground parking lots. So, Rogers should have a compelling wireless offering for years to come.

It gets better. Just over a year ago, Rogers paid more than $5 billion for National Hockey League broadcast rights. This should help sustain its cable TV numbers, since sports fans tend to be more loyal to traditional television offerings (I know this first-hand).

Rogers arguably overpaid in both these deals, but my point remains the same: in the long term, the company has some very compelling offerings. Shareholders should continue to count on a solid dividend.

3. A lack of alternatives

Let’s face the facts: the Canadian stock market is a barren wasteland for dividend investors. There are a couple of reasons why.

First of all, too many of our dividend payers are in risky sectors, like energy and mining. Many of these companies have cut their dividends recently, and their future is uncertain, too. Second, interest rates remain incredibly low, which is boosting demand for dividend stocks. As these stock prices rise, yields naturally fall.

In this context, a 4.4% dividend from Rogers seems pretty good to me.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

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 Benjamin Sinclair has no position in any stocks mentioned. Rogers Communications Inc. is a recommendation of Stock Advisor Canada.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.