Beat the TSX With This Unstoppable Dividend Payer

BCE Inc. (TSX:BCE) could outperform the market with its dividend growth.

| More on:
A person looks at data on a screen

Image source: Getty Images

The S&P/ TSX Composite Index is up 5.8% since January 1. Canada’s blue-chip stocks seem to be recovering after a tumultuous year. However, some sectors of the economy are likely to outperform the rest in 2023. 

Here’s an unstoppable dividend payer that should be on your watch list this year. 

Bell Canada

BCE (TSX:BCE) will always be a good investment stock, regardless of the prevailing economic conditions. Wireless internet access is pretty much an essential utility now, and consumers are likely to pay their phone and data bills, regardless of a potential recession.

Bell is the largest telecom and internet service provider in the country with a 30% market share. While the stock was under pressure in 2022, going down by 7%, it still outperformed the TSX, cementing its position as a top-notch dividend stock. 

Last year, investors were worried about the company’s hardware sales and media division. Nevertheless, the diversified nature of the company’s operations means it is always well positioned to offset such losses. In addition, Bell generates most of its revenues and profits from mobile and internet subscriptions, services that people are always ready to pay for.

In the third quarter, BCE posted a 3.2% increase in revenues compared to the same quarter of the previous year. The increase affirmed the resilience of the company’s core business. Adjusted earnings were up 7.3% as free cash flow rose 13.4%. With management insisting the company is on target to hit its financial targets, the prospects of the company generating significant cash flow are high.


BCE’s growth comes from the natural growth of Canada’s population and the constantly expanding need for more wireless data. As long as the company holds onto its market share its growth is secured by Canada’s immigration policy and the advancements in consumer technology products. 

The company also has deep pockets with assets worth roughly $20 per share. Recurring cash flow means the team has all the capital it needs to make investments and drive revenue growth. The planned $2 billion investment to expand its 5G mobile network should also bolster the company’s long-term prospects. 

Dividend and valuation

Over the last 14 years, BCE has increased its dividend payout by an average of 5.85% every year, underscoring its ability to generate free cash flow. Additionally, the company pays a solid 6.1% dividend yield, which is ideal amid the current high inflation levels for anyone looking to generate some passive income.

While the stock is down by about 11% from its 52-week high, it is currently trading at a discount. The underlying fundamentals are as robust as ever. BCE stock trades at a price-to-earnings ratio of 19.9, which implies an earnings yield of 5%. Assuming steady growth of 5-7% this year, BCE stock seems fairly valued at current levels. 

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 Vishesh Raisinghani has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Target. Stand out from the crowd
Dividend Stocks

RRSP Pension: 2 Dividend Stocks to Buy on the Latest Dip

These high-yield TSX stocks look cheap right now for RRSP investors.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Safe and Sound Stocks for Canadians: My Top 5 Choices

Five safe stocks to buy on a market pullback.

Read more »

5G chip
Dividend Stocks

8.86% Dividend Yield! I’m Buying This TSX Stock and Holding it for Decades

The TSX is a gold mine of lucrative dividend stocks trading near their multi-year low. An 8.86% dividend yield is…

Read more »

green power renewable energy
Dividend Stocks

Brookfield Infrastructure vs. Brookfield Renewable: Which Brookfield Stock is a Better Buy?

Both Brookfield Infrastructure (TSX:BIPC) and Brookfield Renewable (TSX:BEPC) are dividend income earners trading at a discount, but which stock is…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Cash Kings: 3 TSX Stocks That Pay Monthly

These Canadian stocks reward their shareholders with regular monthly dividends and a high yield.

Read more »

Happy retirement

3 Stocks Retirees Should Absolutely Love

Retirees aiming for a solid mix of capital gains and dividend returns should consider these three stocks.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

Passive Income: Top TSX Dividend Stocks to Buy for 7% and 8% Yields

These top TSX dividend stocks look undervalued and now offer high yields for investors seeking passive income.

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

TFSA 101: Earn $500 Per Month Tax-Free

Here's how a covered-call ETF plus a TFSA can help you create a lucrative monthly passive-income stream.

Read more »