BCE Inc. (TSX:BCE)(NYSE:BCE) and Telus Corporation (TSX:T)(NYSE:TU) are two of the three largest communications companies in Canada, and both of their stocks represent very attractive long-term investment opportunities today.
However, in order to stay diversified, we must only choose one for our portfolios, so let’s take a closer look at each company’s earnings results in the first nine months of fiscal 2015, their stocks’ valuations, and their dividends to determine which is the better buy today.
BCE Inc.
BCE’s stock has risen over 4.5% year-to-date, including a decline of about 1% since it released its earnings results on the morning of November 5 for its three- and nine-month periods ended on September 30, 2015. Here’s a summary of eight of the most notable statistics from the first nine months of fiscal 2015 compared with the same period in fiscal 2014:
- Adjusted net earnings increased 16.5% to $2.23 billion
- Adjusted earnings per share increased 7.3% to $2.64
- Operating revenues increased 2.6% to $15.91 billion
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 3.1% to $6.48 billion
- Adjusted EBITDA margin improved 20 basis points to 40.7%
- Cash from operating activities increased 18.8% to $4.9 billion
- Free cash flow increased 9% to $2.08 billion
- Total wireless subscribers increased 1.8% to 8.18 million
At today’s levels, BCE’s stock trades at 16.4 times fiscal 2015’s estimated earnings per share of $3.41 and 15.6 times fiscal 2016’s estimated earnings per share of $3.57, both of which are inexpensive compared with the industry average price-to-earnings multiple of 21.1 and the latter of which is inexpensive compared with its five-year average multiple of 16.
In addition, BCE pays a quarterly dividend of $0.65 per share, or $2.60 per share annually, giving it stock a 4.7% yield. Investors must also note that the company has raised its annual dividend payment for seven consecutive years.
Telus Corporation
Telus’s stock has fallen over 2.5% year-to-date, including a decline of over 6.5% since it released its earnings results on the morning of November 5 for its three- and nine-month periods ended on September 30, 2015. Here’s a summary of eight of the most notable statistics from the first nine months of fiscal 2015 compared with the same period in fiscal 2014:
- Adjusted net income increased 6.3% to $1.23 billion
- Adjusted earnings per share increased 8% to $2.03
- Operating revenues increased 4.6% to $9.29 billion
- Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 4.5% to $3.41 billion
- Adjusted EBITDA margin contracted 10 basis points to 36.7%
- Cash provided by operating activities increased 7.6% to $2.68 billion
- Free cash flow increased 22.4% to $881 million
- Total wireless subscribers increased 2.8% to 8.42 million
At today’s levels, Telus’s stock trades at 16.8 times fiscal 2015’s estimated earnings per share of $2.42 and 14.9 times fiscal 2016’s estimated earnings per share of $2.73, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 17.2 and the industry average multiple of 21.1.
In addition, Telus pays a quarterly dividend of $0.44 per share, or $1.76 per share annually, giving its stock a 4.3% yield. It is also important for investors to note that the company has raised its annual dividend payment for 12 consecutive years.
Which stock is the better buy today?
Here’s how each company ranks when comparing the strength of their earnings results in the first nine months of fiscal 2015, their stocks’ valuations compared with their five-year and industry averages, their dividend yields, and their dividend-growth history:
| Metric | BCE | Telus |
| Earnings Strength | 2 | 1 |
| Forward Valuations | 2 | 1 |
| Dividend Yield | 1 | 2 |
| Dividend Growth | 2 | 1 |
| Average Ranking | 1.75 | 1.25 |
As the chart above shows, BCE has a higher dividend yield, but Telus reported stronger earnings results in the first nine months of fiscal 2015, its stock trades at more attractive forward valuations, and it has a longer streak of annual dividend increases, giving it the easy win in this match up. With all of this being said, both stocks represent great long-term investment opportunities today, so Foolish investors should strongly consider initiating positions in one of them in the trading sessions ahead.
