Many dividend investors want stocks that have paid consistent dividends for a very long time. It’s easy to see why. Business evolves so fast these days. A stock that has a good history of paying dividends has demonstrated that it can evolve with the rest of the market. Even boring industries have changed significantly over the years. It also proves that a company has a moat, which is the holy grail of investing. The ability to pay dividends through thick and thin shows investors the company’s pricing power is good enough that customers won’t just abandon it when times get…
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Many dividend investors want stocks that have paid consistent dividends for a very long time.
It’s easy to see why.
Business evolves so fast these days. A stock that has a good history of paying dividends has demonstrated that it can evolve with the rest of the market. Even boring industries have changed significantly over the years.
It also proves that a company has a moat, which is the holy grail of investing. The ability to pay dividends through thick and thin shows investors the company’s pricing power is good enough that customers won’t just abandon it when times get a little tough.
Canada is filled with stocks that have records of paying dividends for a decade or two. Many of those stocks are great, with some of them becoming a good enough value to enter my portfolio. But they don’t have the kind of history a stock with 135 consecutive years of dividends has.
Think about everything that’s happened since 1881. We’ve had two world wars, a Great Depression and Great Recession, a number of different bubbles, and countless other calamities. And through it all, BCE Inc. (TSX:BCE)(NYSE:BCE) has continued to pay uninterrupted dividends.
What makes this company so special? Let’s take a closer look.
BCE has evolved pretty significantly since its humble roots.
These days, the company is viewed more as a wireless play than anything else. In its most recent quarter, BCE reported more than 8.2 million wireless subscribers, a 1.6% increase from the year before. Add in the company’s ability to grow revenue to existing customers, and it reported a 3.4% increase in total revenue from its wireless operations.
Unlike many of its competitors, it was able to increase wireline revenues as well, increasing both television and Internet subscribers by 3.4% compared with the same quarter last year. The strength in these two businesses helped to offset the only real weakness of the company: its landline phone service, which saw a 6.4% decrease in subscribers.
Finally, the company’s media empire is second to none. Television properties feature CTV, which is Canada’s top station, and TSN, which continues to be the go-to choice for sports fans. The company also owns popular stations like Space, Discovery, Comedy, BNN, and CP 24 in Ontario.
The company is also actively buying up sports franchises. It owns a 37.5% stake in Maple Leaf Sports and Entertainment, as well as part of the Montreal Canadiens. Sports franchises have traditionally been good investments on their own, and owning the team means BCE has easy access to content for its sports media.
BCE’s management knows the telecom sector is no longer growing very aggressively. So the company is creating its own growth through acquisitions.
It started this plan by acquiring the 56% of Bell Aliant it didn’t already own in 2014, spending just under $3 billion to bring Atlantic Canada’s largest telecom into the fold.
BCE didn’t stop there. It recently announced a deal to acquire Manitoba Telecom Services Inc. for $40 per share, a deal that values Manitoba’s largest telecom at approximately $3 billion.
BCE continues to make big deals to further cement its status as Canada’s best telecom. Investors have to like that.
Perhaps the best reason to own BCE is for the company’s dividend.
There aren’t many companies that can provide investors the combination of current yield and dividend security BCE offers. The dividend of $0.6825 per share works out to a 4.5% yield, a payout that’s proven immensely popular with retirees and other income-oriented investors.
Dividend growth has been fantastic too. In 2004 the company paid just $0.30 per share in quarterly dividends. Over a dozen years, which included the company’s failed take-private transaction and the Great Recession, dividends still increased at more than 7% per year.
BCE has been a great investment. It has a great business, limited competition, smart management, and perhaps best of all, one of the best dividends you’ll find. It is truly one of Canada’s finest buy-and-hold forever stocks.
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Fool contributor Nelson Smith has no position in any stocks mentioned.