4 Reasons to Put BCE Inc. in Your RRSP

BCE Inc. (TSX:BCE)(NYSE:BCE) is a long-term favourite among buy-and-hold investors, and that trend should continue.

Here are the reasons why I think BCE deserves to be a top pick for an RRSP portfolio.

1. Reliable earnings

BCE delivered steady results in 2015. The company reported adjusted earnings per share of $3.36, up 5.7% from 2014. Operating revenues increased 2.2% and free cash flow rose 9.3% compared with the previous year.

The mobile, wireline, and media businesses all contributed to the strong performance.

The wireless operations increased operating revenues by 8.7%, driven by service revenue growth of 7.6% and a 22% pop in product revenues. The results are impressive considering the fact that BCE had to battle hard to retain mobile customers after all three-year contracts expired in June. The company finished 2015 with 3.7% more postpaid wireless subscribers.

BCE’s wireline division saw operating revenue drop 0.5% in 2015, but cost reductions helped produce a 1.1% gain in EBITDA. The slowing economy resulted in lower business spending on service solutions and data product equipment. The residential side of the business performed better with a 5.3% jump in combined TV and Internet revenues. The company’s Fibe TV subscribers jumped 27% compared with 2014 and high-speed Internet subscribers increased by 3.5%.

Bell Media revenues increased by 1.3% in 2015 compared with the previous year.

2. Dividend growth

BCE just increased its quarterly dividend by 5% to $0.6825 per share. The new distribution yields about 4.7%.

This company is a cash machine, and investors should see the steady rate of dividend increases continue in the coming years.

3. Limited competition

When looking for RRSP picks, investors should search for companies with dominant positions in industries that have limited competition. BCE is exactly that stock, and there is little reason to believe the situation will change.

Some pundits are concerned that an international company will eventually enter the Canadian market. That is unlikely to happen because the cost required to build a national network is too high for the potential rewards. Canada is a very large country with a population of just 36 million. To put things in perspective, the city of Tokyo/Yokohama alone has a population of about 33 million.

4. Stable stock price

BCE is a great stock to own when markets are in a downward trend, and it is one of the few Canadian names you can simply buy and forget about for decades. Over the past year the S&P/TSX composite is down more than 18%, yet BCE is up 5% over the same time frame.

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

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