How Rogers Communications (TSX:RCI.B) Is Outdoing its Peers

Investors contemplating an investment in Canada’s saturated telecom market need to seriously consider Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI).

| More on:
TELECOM TOWERS

Image source: Getty Images

Over the past year, Rogers Communications (TSX:RCI.B)(NYSE:RCI) has done something incredible: the company has broken the stereotypical view of the Big Three telecoms and has begun to seriously invest in growth across a number of different areas.

Here’s a look at what has changed at Rogers and why current and prospective investors should take note.

Print is out

Last month, Rogers announced it was selling both its print and digital publications, which includes popular brands such as Chatelaine, Hello! Canada as well as Maclean’s and Canadian Business to a privately owned publishing company, St. Joseph Communications. As part of the deal, all Rogers Media Publishing employees will be offered positions at St. Joseph.

The move to jettison the print and digital media segment are not entirely unexpected; telecoms are doubling down on their wireless networks, which are still seeing incredible growth, despite what is arguably an increasingly saturated market.

Wireless is (even more) in

To address that insatiable demand in wireless, Rogers is investing heavily into acquiring licences for additional spectrums. This year, that auction was for the 600 MHz band, which is known for its capacity to both cover wide areas and penetrate buildings with ease. As one of the Big Three, Rogers was entitled to bid on 64 of the 104 licences that were up for grabs. The remaining licences were reserved for the smaller market players to bid on to ramp up their own coverage and provide competition to the Big Three.

Rogers walked away from the auction with 52 of those new licences, which carried a combined cost of $1.72 billion and will be used to greatly enhance coverage in Atlantic Canada, Manitoba, northern and southern Ontario, northern Quebec, and the three territories.

Dividend hikes are back

Rogers’s quest to slice its debt and improve its service has finally paid dividends — literally. Following several years of no dividend growth, the company announced a dividend hike last quarter, which brought its yield up to 2.78%. While the payout is still significantly lower than its peers, Rogers can boast the ability to more easily cover that payout while continuing to chew away at its debt.

Management stated that further hikes could follow, but the focus will be on slashing debt and improving the business.

Subscribers are growing and that’s a good thing

The investment into wireless is finally paying off in terms of subscribers. In the most recent quarter, Rogers announced a whopping 112,000 new postpaid subscribers, culminating in some of the best numbers seen in a decade, handily beating the 72,000 reported in the same quarter last year.

That stellar growth has another notable side effect for investors: 5G. That latest standard is set to begin rolling out over the course of this year en mass, and with that rollout, consumers can expect a flurry of new devices and data allowances to match that new standard, which, for investors, translates into a welcome boost to revenues.

In my opinion, Rogers remains a stellar long-term option for growth- and income-seeking investors. Buy it and forget about it for a decade or more.

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 of the stocks mentioned.

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 »