When the stock market got choppy recently, and all those high-growth overvalued tech stocks took a tumble, investors fled to value stocks. These are large-cap, blue chip companies with good balance sheets, strong cash flow, profitability, and ever-increasing dividends with long, consistent payout histories.
Fortunately for Canadian investors, our stock market is full of these heavy hitters. Today, I’ll profile two top stocks from the telecom industry — a historically low-volatility, safe sector of the stock market that delivers slow but steady returns over the long run with the potential for high growth for some companies.
Telus
Telus (TSX:T)(NYSE:TU) provides a range of telecommunications and information technology products and services in Canada, operating through both Wireless and Wireline segments. Its products and services are diverse, including internet, cable, security, home automation, healthcare, agriculture, and cloud-based products.
T currently has a forward annual dividend yield of 4.33%, with a five-year average dividend yield of 4.15%, which is quite respectable. Aside from that, the company’s revenues, earnings, and dividend payouts have increased consistently over the last decade, displaying good growth and profitability.
T trades at around $30, which is close to its 52-week high of $30.75. The stock has a five-year monthly beta of 0.54, making it half as volatile than the overall market. T is also trading slightly above both its 50-day and 200-day moving averages of $29.60 and $28.28, respectively, which could indicate an overall bullish trend.
BCE
BCE (TSX:BCE)(NYSE:BCE) provides wireless, wireline, internet, and television (TV) services to residential, business, and wholesale customers in Canada. It operates through three segments: Bell Wireless, Bell Wireline, and Bell Media. Their products and services include internet, phone, satellite TV, streaming services, digital media, and broadcasting.
BCE currently has a forward annual dividend yield of 5.24%, with a five-year average dividend yield of 5.32%, which is very impressive. BCE has a long-standing history of consecutive dividend increases and payout streaks, making it a top Dividend Aristocrat to anchor your core portfolio holdings with.
BCE currently trades at around $67 — close to its 52-week high of $67.70. The stock has a five-year monthly beta of 0.34, making it a third as volatile than the overall market. BCE is also trading slightly above both its 50-day and 200-day moving averages of $65.66 and $63.19, respectively, which could indicate an overall bullish trend.
The Foolish takeaway
Dividend-growth investors chasing high yield should consider the Canadian telecom sector — Telus and BCE in particular. These two stocks offer excellent fundamentals, substantial dividend yields, long histories of payments and consecutive increases, and good competitive advantages. Buying and holding these three stocks as the core of an income-oriented portfolio could be a winning strategy.
