In the wake of the pandemic, telecommunication companies flourished, as the demand for fast and stable internet connection skyrocketed. Firms in this sector are usually attractive to conservative investors looking to add dividend-yielding stocks to their portfolios. However, 5G stocks like BCE (TSX:BCE)(NYSE:BCE) also have the potential to provide ample capital appreciation.
For a while now, this firm has maintained good fiscal discipline, rewarding investors through consistent dividend yields.
That’s not the only reason why BCE remains one of my top picks.
5G opportunities set to open new doors
In June last year, BCE announced the launch of Canada’s largest wireless 5G network. BCE’s exceptional mobile data speeds and 5G infrastructure growth thus far have been impressive. From a broad sector perspective, I think 5G is much more impactful that many investors may think right now.
The high-capacity data transfer abilities of 5G is a game changer. This technology will support a wide range of new consumer and business applications in the coming years. Among these, augmented reality and machine learning, AI, electric vehicles, IoT, and even smart cities come to mind.
Those are a lot of growth areas set to flourish because of 5G.
If CES 2021 gave any takeaways, IoT is set to play an even larger part in our lives. Industry commentary has definitely focused on IoT’s transformative nature, indicating that connected devices are set to play an even more significant role across all sectors.
As fast wireless networks become an increasingly valuable asset, blue-chip telecom stocks become a great long-term investment option. Investors should expect net income and dividends paid to keep climbing, making BCE a steady cash cow for multi-year wealth creation.
Consistent and diversified dividend play
BCE ticks the two most important boxes that investors consider while purchasing dividend-yield stocks: strong dividend earnings and stability.
At the time of writing, this firm’s dividend yield sits at a healthy 6.20% per year. At around $57 per share, BCE is trading at around 55% below my estimated fair value price, presenting solid upside potential.
Earnings are forecast to grow at a compound annual rate a sliver below 10%. That’s some pretty incredible growth for any company, let alone a telecom player. As mentioned, I think the 5G revolution is a real catalyst investors need to plug into their model.
Additionally, I think telecoms like BCE are well positioned to continue the momentum they picked up during the pandemic. Indeed, BCE looks like a solid, low-risk, long-term investment in any investor’s portfolio.
Like 5G? Then you definitely need to read this:
5G is one of the greatest arrivals in technology since the birth of the internet. We could see plenty of new wealth-building opportunities in 2021 that would potentially dwarf any that came before them.
5G has the potential to radically change our lives and society as we know it, but if you’re an investor, the implications are even greater — and potentially much more lucrative.
To learn more about it and its revolutionary potential to change the industry — and potentially your bank account — click on the link below to get the full scoop.
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 Chris MacDonald has no position in any of the stocks mentioned.