Have you invested in BCE Inc. (TSX:BCE)(NYSE:BCE) recently?
Canada’s largest telecom provides investors with a long list of benefits, making it an excellent holding for nearly any portfolio.
Telecoms have a new primary focus
Telecoms like BCE offer core subscription services of internet, TV, phone, and wireless services. Of those subscription offerings, the wireless segment is the one that continues to garner an incredible amount of interest and opportunity.
The next time you are on a train, bus, or anywhere there are a lot of people sitting and waiting, look around and see what your fellow commuters are doing. Chances are that everyone is on a smartphone or tablet, eating up their allotment of mobile data.
Smartphones are everywhere, and we’re using them to take the place of individual devices that we rarely purchase on their own, such as alarm clocks, cameras, daily agendas, notepads, and countless others. To put it another way, smartphones have become a necessity of our busy, connected lives.
And we’re using smartphones more with each passing year.
Industry leaders have noted that over the course of the past few years, our data consumption has doubled every year, and that’s a trend that doesn’t seem likely to end any time soon. This is also one of the primary reasons why one of BCE’s competitors has banked on creating a competing mobile network.
For BCE, the growing reliance on mobile creates an incredible opportunity for growth, offsetting any potential cannibalization from other segments, as, for example, a mobile subscriber chooses to unsubscribe from home phone service because they are constantly connected through their mobile device.
What about interest rate concerns?
One common concern regarding telecoms and BCE is the issue of rising interest rates. As interest rates begin to climb, attention begins to mount on debt loads and their respective refinancing costs.
BCE holds a considerable amount of debt, and this is what some investors are concerned about; some have moved on from BCE to other investments that are perceived to be safer. That fear has brought down the stock price, which is currently trading near its 52-week lows, and it has also pushed the dividend yield higher to 5.45%.
While that fear of rising interest rates is a notable concern, it’s also an overplayed one that BCE can deal with. BCE’s incredible moat and expansion into nearly all aspects of our lives offsets that risk with a reliable and growing source of revenue.
Chances are that in any single day, you’ve watched or listened to a BCE-owned media property, used or sent information to someone on the BCE network, or heard about, watched, or purchased tickets to a BCE-owned sports team. BCE even branched out into the home security and monitoring business recently through the masterstroke acquisition of AlarmForce.
If anything, the recent drop in share price provides an excellent opportunity to continue to be greedy and buy more shares of BCE with that increased purchasing power.
As such, BCE remains, in my opinion, an excellent long-term investment.
