The Coronavirus Market Crash: Is This the Safest Dividend Stock on the TSX?

BCE Inc (TSX:BCE)(NYSE:BCE) pays a solid dividend and its business may not be that vulnerable to the coronavirus pandemic.

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The coronavirus has had a negative impact on many companies, to say the least. Some businesses have laid off employees and in the case of restaurants, they’ve shut down all or part of their operations. Dividend cuts are also the norm these days, leaving investors wondering which stocks are a safe buy right now. If you’re also trying to figure out which stocks to buy, you may want to look more closely at telecoms.

Internet and mobile phone services are going to see activity levels through the roof as people stay home and try to fight the boredom of having to stay indoors any way that they can. It’s no more evident than in streaming, where consumers are binge-watching television shows and movies online.

The traffic is so high that Netflix recently announced that it would be lowering the video quality of its streams in order to reduce the load on its Internet bandwidth.

That’s a good sign for a company like BCE Inc (TSX:BCE)(NYSE:BCE), which owns streaming service Crave. BCE’s also had to scale back the quality of some of its streams.

The company’s adapted to the coronavirus pandemic and the majority of its employees are now working from home. Unfortunately, that hasn’t stopped the stock from falling right along with the TSX.

As of the end of last week, shares of BCE were down around 10% since the start of the year. However, that’s not as bad as the TSX, which has declined more than 20% over the same period.

Should investors be buying shares of BCE?

BCE looks to be in a good position to get through this adversity as its products and services will continue to be in demand, which makes the company one of the more stable stocks to invest in on the TSX today. But that doesn’t mean that investors should expect much growth from the company. In 2019, its sales were up just 2% from the prior year, and in 2018 its top line improved by just 3% from 2017.

The reason investors may want to buy shares of BCE isn’t for its growth — it’s been minimal and likely will continue to be — but rather for its dividend. With the drop in price this year, BCE is now paying shareholders a dividend yield of more than 6% per year.

The company recently raised its payouts from $0.7925 to $0.8325 for an increase of 5%. Five years ago, the stock was paying $0.65. Payments have increased by 28% since then, averaging a compounded annual growth rate of over 5%.

But what’s most important is that there shouldn’t be a big slowdown in its business as a result of the coronavirus. For dividend investors, that’s key, as it suggests that the company can maintain the status quo and that its dividend payments aren’t in any danger of being cut.

With a profit margin of more than 10% in each of the past six years, Bell’s shown a lot of consistency, which is crucial in maintaining and growing its dividend.

Whether you’re looking for a dividend or just a stable stock that’s not likely to see a large selloff as a result of the coronavirus, BCE could be a solid pick for your portfolio.

It’s one of the largest stocks on the TSX, an industry leader and could well be a pillar to build your portfolio around.

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.

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