Passive income investors saving up for retirement should take advantage of any broader market swoons. Undoubtedly, stocks have really heated up since the start of the year. But not all names have contributed to the rally evenly. The technology sector (last year’s biggest loser) is a huge winner this year. And energy, which did quite well amid the U.S. bear market, is now on the receiving end of volatility.
Which sector takes the lead as the bull market extends itself remains the big question. Regardless, I still see plenty of value in some of the higher-yielding areas of the market. Chasing yield can be a dangerous proposition if you don’t put in the appropriate amount of research. In fact, chasing anything, from momentum to falling knives, can get new investors into trouble. Instead, I like to ensure ample time to conduct due diligence so one isn’t inclined to “rush” a decision.
Passive income investors: Don’t rush into any stock!
Remember, just because the market has been moving quickly does not mean you need to give into any sort of FOMO (or fear of missing out). Whether it be a fear of missing out on a deep-value bargain or a sudden upside surge, I think disciplined investors can do better by not putting any potentially unrealistic time limits on when they should buy a stock.
Will there be opportunities that are timelier than others?
Sure, but passive-income investors gearing up for a rich retirement should think more over the longer-term horizon. It never feels good to miss out on a day or two of gains. But in the grander scheme of things, such day-to-day moves don’t tend to mean the difference between a comfortable retirement and one that entails extreme frugality.
In this piece, we’ll have a quick look at one high-yield value option with generous dividend yields and some pretty decent long-term growth prospects. Consider Canadian telecom firms Rogers Communications (TSX:RCI.B).
Rogers Communications: A dirt-cheap dividend stock for seekers of passive income and growth
Rogers is a relative underdog when it comes to the “Big Three,” as they’re often referred to by Canadian investors. The long-time telecom titan hasn’t really performed well for investors over the past five years. Over this span, shares have actually sunk by around 8% when not considering dividends. With dividends included, the total returns aren’t as ugly. But there’s no denying the underperformance relative to its peers.
The $30.5 billion telecom is fresh off its acquisition of Shaw Communications. The deal, I believe, gives Rogers the means to make up for lost time. Indeed, the bundling opportunities are considerable and could help the Canadian telecom put up a better fight with its top rivals in the space.
More than a month ago, the company lowered prices on its popular 5G plans. Shaw customers stand to save even more. As the company offers more data for less, while showing to customers how impressive its network can be, I’d argue Rogers stock ought to be worth more of a premium as it puts its disruptor hat on, challenging its peers on price.
The stock trades at 16.2 times trailing price-to-earnings (P/E), making it a relative bargain in the Canadian telecom scene. With a 3.48% dividend yield, Rogers sports a much smaller yield than peers. Still, it’s a well-covered payout that I think could grow considerably over the next 5-10 years. Passive income investors take note!
In terms of dividend growth potential and upfront yield, I find Rogers offers the best of both worlds. Though the multi-year chart isn’t pretty, I do think things could change for the better over the next five years.
