Investors: Get Rich Learning to Love Canada’s Most-Hated Companies

Consumers hate Telus Corporation (TSX:T)(NYSE:TU), Royal Bank of Canada (TSX:RY)(NYSE:RY), and Fortis Inc. (TSX:FTS), which is exactly why you should own them.

| More on:
The Motley Fool

A common tip in the personal finance world is that you should phone your Internet, cable, or wireless provider and ask for a discount. If needed, threaten to take your business to a competitor.

It’s a good tip, one that can easily save $20 per month. In terms of a return-on-time perspective, it might be the most profitable call you make all year. Saving $240 over a 20-minute phone call is immensely profitable.

And yet, I don’t do it, and I’m willing to bet most of the people reading this don’t either. There are plenty of reasons why. We don’t want to be jerks. We don’t want to waste the time of the person on the other side of the line. And what if they call our bluff? So we just maintain the status quo, even though we might not like it.

This can lead to great resentment, especially among those of us who don’t have telecom stocks in our portfolios. It’s gotten to the point where if there’s a complaint online about a company, chances are it’s about one of Canada’s telecom leaders.

Many investors look at these companies and refuse to add them to their portfolios. I think that’s the wrong attitude. In fact, I’d even take it a step further and say these are the types of companies that should make up a big chunk of your portfolio.

What they have in common

There’s always one common theme whenever folks complain about something: for the amount of money they’re paying, they deserve better service.

From a consumer’s standpoint, this isn’t great. But from an investment standpoint, this is exactly what we’re looking for in the companies we own. They provide a service that’s needed. They charge enough for it that customers feel ripped off if something goes wrong. And it’s obvious they have little in competition or else customers would flee en masse.

Really, the only thing they don’t have going for them is customer satisfaction. But even then, the company knows that for every annoyed customer it loses, it’s likely to gain one from a competitor.

Three of the best

There are three different companies that really benefit from this.

One is Telus Corporation (TSX:T)(NYSE:TU). The interesting thing about Telus is that the company’s management is well aware of this phenomenon. Instead of just accepting it as true, management adopted a different strategy. Telus has given more authority to its front-line staff, allowing them to make decisions on matters that used to require speaking to a manager.

This has helped Telus take market share away from its competitors, especially on the wireless side. Growth in Internet continues to be strong too, and the company is moving aggressively to expand its television service across western Canada, much to the chagrin of competitors who are already feeling the pinch of cord cutters.

Another example of a company that is hated by consumers is Royal Bank of Canada (TSX:RY)(NYSE:RY). Royal Bank is a dominant force in Canadian banking. It has the most branches and is either the leader or second best in each key product category. The company is also the go-to investment banker in Canada.

If you’re bearish on Canada, keep in mind that RBC is diversified beyond our borders. It gets 25% of its revenue from international sources with about half of that amount coming from the United States. That kind of diversification is good news if the Canadian consumer continues to be weak.

And finally, we have Fortis Inc. (TSX:FTS), Canada’s largest provider of power and gas. Between its operations in Atlantic Canada, Ontario, Alberta, British Columbia, the United States, and the Caribbean, it provides more than three million customers with utilities they just can’t get anywhere else.

For the most part, Fortis operates in places where the price of their product is regulated. This means a diet of steady price increases and, most importantly, regular profits. And like Royal Bank, Fortis is becoming more exposed to the U.S. dollar, a trend that is good news–at least in the short term.

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 Nelson Smith has no position in any stocks mentioned.

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »