Why I Continue Buying Shares of This Magnificent Dividend Stock Hand Over Fist

This glorious dividend stock is a buy in all market situations. It not only gives you market returns but also dividend growth.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Even risk-takers look for some certainty. Knowing that you will receive X amount in your account gives you the backing to take risks. But that doesn’t mean you should put most of your portfolio in fixed-income securities. Build a diversified pool of fixed-income securities and magnificent dividend stocks that react differently to different situations. 

Why buy dividend stocks hand over fist? 

Dividend aristocrats give you a slightly better return than fixed-income securities in the long run as their dividend amount grows along with the economy. This quality of dividend aristocrats makes them an investment investors continue buying hand over fist. 

Most dividend aristocrats are utility companies. Electricity, gas, water, and internet are some basic necessities for which you shell out money every month. There is no quality difference, and it is mostly a single provider because the cost of setting up the infrastructure is high. Thus, they enjoy regular cash flows. Now electricity and gas prices are regulated, but internet prices are not. That gives telecom companies an advantage of charging subscribers higher amounts for 5G

Among the dividend aristocrats, BCE (TSX:BCE) is my first choice. Here’s why. 

One dividend stock to continue buying 

BCE is a stock you may already have in your Registered Retirement Savings Plan (RRSP) portfolio. But you can also buy it in your Tax-Free Savings Account (TFSA). If you are looking for an investment but can’t understand where to park your money, BCE is a good choice. 

Created with Highcharts 11.4.3Bce PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Let’s look at BCE stock’s performance. Its share price is not too volatile. During the 2021 tech bubble, when everything was rising at a rapid pace, BCE stock surged 21%, in line with the S&P TSX Composite Index. In the last 12 months, BCE and the S&P TSX Composite Index fell almost 11%. This performance shows that BCE can give you a market return. 

If you invest in an S&P TSX Composite Index ETF, you only get exposure to price momentum for an annual management fee. But with BCE, you don’t have to pay a management fee, and you can lock in an average dividend yield of 5.5%. The telco has been growing its dividend at an average rate of 5% for 11 years. 

Why invest in BCE? 

In Canada, three telcos – BCE, Rogers Communications, and Telus Mobility – account for 86% market share. Among the three, Rogers Communications has been stuck on the $20 billion merger with Shaw Communications for two years. This merger will make Rogers an industry leader and keep BCE on its toes with its continuous focus on efficiency and competitivity. Telus is also a good dividend stock to diversify your portfolio, but it has a lower average dividend yield of 4.9%.

How to invest in such dividend stocks continuously 

There is a trick to buying dividend aristocrats without burning a hole in your pocket. Like your rent and utility bills, you can allocate a $250 monthly budget to these stocks. As they are not very volatile, your investment amount will grow in the long term along with the market, with some hiccups in the short term. 

YearBCE average share price
(4% CAGR)
ContributionNo. of shares purchasedTotal sharesDividend per share
(5% CAGR)
Annual dividend
2023$63.0$3,000.047.6 $3.9$184.3
2024$65.5$3,000.045.893.4$4.1$379.6
2025$68.1$3,000.044.0137.4$4.3$586.4
2026$70.9$3,000.042.3179.8$4.5$805.4
2027$73.7$3,000.040.7220.5$4.7$1,037.1
2028$76.6$3,000.039.1259.6$4.9$1,282.3
2029$79.7$3,000.037.6297.2$5.2$1,541.6
2030$82.9$3,000.036.2333.4$5.4$1,815.7
2031$86.2$3,000.034.8368.2$5.7$2,105.4
2032$89.7$3,000.033.5401.7$6.0$2,411.6
Invest $250/month and get $200/month in passive income

You make a monthly investment of $250 for 10 years in BCE, whose stock price and dividend per share grows at a CAGR of 4% and 5%, respectively. The stock has the potential to give you a passive income of $200/month ($2,411 annually) in 10 years and grow your $30,000 investment to $36,000. 

Diversify your dividend portfolio to earn a 6% dividend yield and 5% dividend growth to realize the above passive income. 

Should you invest $1,000 in Restaurant Brands International right now?

Before you buy stock in Restaurant Brands International, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Restaurant Brands International wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Rogers Communications and TELUS. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Asset Management
Dividend Stocks

How I’d Allocate $10,000 in 2 Canadian Growth Stocks for the Long Run

Both growth stocks offer a compelling mix of income, growth, and value, and I believe they can outperform over the…

Read more »

grow money, wealth build
Dividend Stocks

2 Dividend-Growth Stocks to Buy on the Pullback

These stocks have increased their dividends annually for decades.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

BCE Stock Analysis: A Smart Choice for Potential Value and Income

BCE stock has slipped to its June 2009 level amid Trump tariff uncertainty and intensity. Does the sharp dip provide…

Read more »

Person slides down a stair handrail
Dividend Stocks

Should You Buy Cargojet Stock at $70?

Cargojet stock might be down, but don't let that scare you off. It's still a long-term opportunity.

Read more »

Middle aged man drinks coffee
Dividend Stocks

3 Monthly Dividend Stocks to Buy and Hold Forever

Add these three TSX dividend stocks to your self-directed portfolio for reliable monthly passive income.

Read more »

Hourglass projecting a dollar sign as shadow
Dividend Stocks

How I’d Build an Income Portfolio With 3 TSX Stocks Paying Monthly Dividends

Focusing on these three monthly paying TSX dividend stocks can help you reinvest more frequently, enhancing overall returns.

Read more »

Dividend Stocks

How I’d Divide $15,000 Across My Top 3 TSX Stock Picks for Growth and Income

Got $15,000? Here are three TSX stocks that could provide ample dividend and capital returns in the coming years ahead.

Read more »

concept of real estate evaluation
Dividend Stocks

Canadian Real Estate Stocks: How I’d Navigate This Sector With $15,000 During The Pullback

A $15,000 investment split among these two undervalued Canadian defensive REITs could generate high income yields with capital gains upside

Read more »