TFSA Investors: Is Now the Time to Buy Rogers (TSX:RCI.B) Stock?

Rogers Communications Inc (TSX:RCI.B)(NYSE:RCI) has fallen to levels not seen in over a year and could be a bargain buy.

| More on:
Man holding magnifying glass over a document

Image source: Getty Images.

If you’re a dividend investor looking for a stock to put in your TFSA, Rogers Communications (TSX:RCI.B)(NYSE:RCI) could be an option to consider today. With the share price recently taking a big hit, the stock has reached a new 52-week low, which is not something we see happen to Rogers very often. It could be a great opportunity to buy the stock at a reduced price.

What happened?

Rogers ran into trouble when it released its quarterly earnings results earlier this month. What sent investors into a bit of a panic was when the company adjusted down multiple numbers on its forecast for 2019, including both revenue and profit.

Anytime forecasted numbers are reduced, the markets are not going to take that news well, and so it’s no surprise that Rogers saw its stock tumble as a result, dropping 8% in a matter of days. However, it may have been a bit excessive, especially when you consider the reason for the forecast adjustment: the company’s unlimited data plans have simply become too popular.

Although the company noted that offering these data plans will be good for the long term, customers have been signing up for the deals at a much quicker rate than the company had expected.

Rogers president and CEO Joe Natale stated in the press release, “Customer adoption is three times higher than originally expected, reflecting pent-up demand for worry-free data. While the reduction in overage fees from these plans will impact our results in the next few quarters, the underlying economics of device financing and unlimited plans are favourable and position us for long-term growth.”

Why investors shouldn’t be worried

While Rogers won’t benefit from overage fees if customers switch to unlimited data plans, by having a popular product, they could attract a lot more consumers and take market share away from competitors that don’t offer unlimited data plans. In the end, having fewer customers is a lot more problematic than a forecast adjustment.

Ultimately, the stock is down as a result of short-term concerns for a stock that’s a great long-term buy, and that’s why this recent adversity in the markets shouldn’t scare off investors.

Now could be a great time to buy the stock for its dividend

One of the big benefits of the stock having fallen recently is that it gives investors the opportunity to buy low on what’s still a quality stock. Currently yielding at around 3.3%, Rogers could generate a lot of cash flow for investors over the years. And inside a TFSA, all that dividend income remains tax-free. What makes the stock an even better buy is that Rogers has raised its dividends over the years as well, meaning that you’ll likely be earning more on your investment over time.

For a blue-chip stock like Rogers to fall as a result of a mobile data plan being too popular, that’s as good a reason as there is to buy on the dip. While the markets may be bearish as a result of the short-term impact, the reality is that over the long term, the stock has actually gotten a whole lot stronger.

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 David Jagielski has no position in any of the stocks mentioned.

More on Dividend Stocks

A person builds a rock tower on a beach.
Dividend Stocks

CPP Pension: Boost Your Payouts by $5,232 per Year

You can raise your after-tax CPP by making RRSP contributions. Alimentation Couche-Tard (TSX:ATD) is a good RRSP stock.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 No-Brainer Stocks to Buy With $20 Right Now

Here are three no-brainer stocks that are suitable for anyone getting started on their investing journey.

Read more »

growing plant shoots on stacked coins
Dividend Stocks

3 Top Dividend Stocks That Keep Raising Their Payouts

These three TSX stocks are ideal buy as they consistently raise their payouts, depicting their healthy financials.

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

This 5% Dividend Stock Pays Cash Every Month

This monthly dividend stock offers cash every month, but also returns that continue to climb higher from being in a…

Read more »

Solar panels and windmills
Dividend Stocks

How Much Will TransAlta Renewables Pay in Dividends This Year?

TransAlta Corporation’s (TSX:TA) acquisition of TransAlta Renewables stock holds significant implications for income-oriented investors who previously held this monthly dividend…

Read more »

Dividend Stocks

3 Stocks That Can Help You to Get Richer in the Next 5 Years

Consistent growth stocks with a relatively bright future are one of the most trustworthy ways to grow wealth.

Read more »

Dividend Stocks

3 Blue-Chip Stocks Every Canadian Should Own

These Canadian blue-chip stocks are backed by well-established businesses and a growing earnings base, enabling them to generate above-average returns.

Read more »

grow money, wealth build
Dividend Stocks

Is This 7.25%-Yielding Dividend Grower the Ultimate Income Stock?

This top Canadian dividend stock has increased the distribution annually for nearly three decades.

Read more »