Which Is the Better Investment: BCE Inc. or Rogers Communications Inc.?

BCE Inc. (TSX:BCE)(NYSE:BCE) and Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) are the largest telecommunications companies in the country, but which is the better investment today?

| More on:
The Motley Fool

Investors are often told to diversify investments by picking the better company of two or more that are in the same industry. When it comes to telecommunications and media companies, there are two juggernauts in the Canadian market place: BCE Inc. (TSE:BCE)(NYSE:BCE) and Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI).

Here’s a look at both of them to see which one represents a better opportunity for investors today.

The case for BCE

BCE has long been known as one of the best dividend stocks on the market. The company has been paying out a dividend at a fair rate for well over a century–something that very few companies can attest to doing. The current quarterly dividend stands at $0.68 per share, which, given the current stock price of $60.78, provides a very healthy yield of 4.49%. In the past six months the stock has risen by 6.6%.

Part of the reason why BCE can pay such a handsome dividend is because the company has vast infrastructure already set up. This allows the company to give a significantly higher payout ratio than some competitors.

That’s not to say that there’s no growth prospects for BCE. The BCE empire is far greater than telecommunications and media as the company owns radio and TV stations, agencies, and even sports teams. BCE is everywhere and constantly growing.

In the most recent quarter, BCE posted revenues of $5.2 billion.

Recently, the company announced the purchase of the smaller competitor, Manitoba Telecom Services Inc. in a deal worth $3.9 billion. The deal, which is subject to regulatory approvals, will add the Manitoban provider of phone, Internet, and wireless services to BCE, enhancing BCE’s reach into the western provinces.

The case for Rogers

Rogers is another notoriously known company with many of the same types of holdings as BCE. In fact, both Rogers and BCE are the primary owners of Maple Leaf Sports and Entertainment (MLSE) at 37.5% each. MLSE owns the Toronto Maple Leafs, the Toronto Raptors, and Toronto FC.

Rogers currently trades at $50.59, down 1.46% over the past six months. Looking over a longer period of a full 12 months shows the stock up impressively by 16.03%.

The company pays out a quarterly dividend of $0.48 per share, giving the stock a yield of 3.8%. Rogers’s dividend is by no means weak, but it remains secondary to the growth and yield offered by BCE.

In the most recent quarter, Rogers posted total revenues of $3.2 billion.

Last year, Rogers completed the acquisitions of both Mobilicity, a mobile virtual network operator, as well as a significant spectrum purchase from Shaw Communications Inc., another wireless competitor that operates mainly in the west of the country.

The better investment is…

BCE Inc. is in my opinion, the better of the two companies to invest in. That’s not to say that Rogers is a poor investment; both companies have significant growth prospects and provide a decent dividend to shareholders.

BCE, however, has a better dividend and has been more aggressively pursuing expansion over the past year to not only solidify its position as the largest telecommunications and media company in the country, but to also expand the distance between the top two.

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 Demetris Afxentiou has no position in any stocks mentioned. The Motley Fool owns shares of ROGERS COMMUNICATIONS INC. CL B NV.  Rogers Communications is a recommendation of Stock Advisor Canada.

More on Investing

Nuclear power station cooling tower
Metals and Mining Stocks

If You’d Invested $1,000 in Cameco Stock 5 Years Ago, This Is How Much You’d Have Now

Cameco (TSX:CCO) stock still looks undervalued, despite a 258% rally. Can the uranium miner deliver more capital gains to shareholders?

Read more »

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 »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Arrowings ascending on a chalkboard
Energy Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Canadian Natural Resources stock is well set up to beat the TSX as it continues to generate strong cash flows…

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 »