This Top Dividend Stock Has Gotten 7% Cheaper: Time to Buy?

Rogers Communications Inc (TSX:RCI.B)(NYSE:RCI) status as a top Canadian dividend stock is intact, despite some short-term setbacks.

| More on:
Man considering whether to sell or buy

Image source: Getty Images.

Rogers Communications (TSX:RCI.B)(NYSE:RCI) is a top dividend stock to hold over the long run. Rogers is Canada’s second-largest telecom company, but it has the largest market share of the country’s growing wireless segment, dominating about a third of the market’s revenue and subscribers.

Rogers drives about 60% of its revenue from the wireless segment, 26% from its cable division, which includes high-speed internet, information technology and telephony services to consumers and businesses, and the rest from its vast media assets.

But that dominance is coming under threat amid cut-throat competition in the wireless market. Rogers told investors yesterday that it added fewer net wireless subscribers in its fiscal second quarter as a price war escalated.

The biggest sign of this pain was visible in the number Rogers provided for its postpaid net subscriber, a key metric for telecom companies. Rogers added 77,000 subscribers under this head, short of analysts’ estimates of 99,250. 

Sales also missed analysts’ forecast, coming in at $3.78 billion, while revenue at the wireless division rose just 1% to $2.24 billion as Freedom Mobile, a small but growing competitor, added its market share. 

Accounting to Bloomberg data, Freedom Mobile in the first quarter had captured 37% of the new postpaid subscribers signed up by the top four Canadian telecom providers. Rogers’s market share of industry net adds declined to 13% from 35% in the same period.

This stiff competition and declining sales have also impacted Rogers’s share price, which has fallen about 7% from the 52-week high, leaving the stock almost unchanged so far this year. 

Despite this negative backdrop, I still find Rogers a better telecom stock than its rivals. The main reason I like Rogers is that the telecom operator is ahead of competition in rolling out the next generation of telecom services. 

In the country’s first auction in April for airwaves that will support fifth-generation (5G) technology, Rogers invested more than $1.7 billion for the 600-megahertz airwaves, including 100% of the available airwaves in southern Ontario, a densely populated region on top priority for any telecom provider.

The company is getting ready to deploy 5G, technology with various acquisitions across the country. It has partnered with mobile telecom equipment maker Ericsson for 5G trials in Toronto and Ottawa, among other cities.

Bottom line

Rogers stock has got much attractive after its recent pullback. Trading at $69.34, the stock yields about 3% and pays $0.5 dividend quarterly. On total-return basis, I see investors will be much better off in owning Rogers stock.

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 Haris Anwar has no position in the stocks mentioned in this report.

More on Dividend Stocks

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 »

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 »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »