Finding that perfect mix of stocks to invest in early on can make the difference between retiring comfortably or needing to work for a few extra years. Fortunately, the market gives us plenty of options to consider, including a top telecom investment that should be on every investor’s radar.
That top telecom investment is BCE (TSX:BCE). Here are a few reasons why investors, particularly those with longer timelines, should consider buying today.
BCE is both diversified and defensive
Telecoms like BCE are some of the most defensive stocks on the market. This is partially attributed to the stable subscription-based business model that telecoms follow.
BCE boasts the typical bevy of subscription offerings. Some of those services, specifically the internet and wireless segments, have experienced substantial growth since the pandemic started.
Specifically, the growing demand by remote workers for a fast and stable internet connection has increased the defensive appeal of this already defensive pick. In the most recent quarter, BCE saw consumer internet growth of 10% over the prior period.
That’s not all. The steady growth in mobile commerce has kept BCE’s wireless segment in growth mode.
In fact, BCE reported 43,289 postpaid mobile activations in the most recent quarter. This reflects a 26.5% bump over the same period last year. That growth, coupled with an ARPU (average revenue per unit) increase of 0.9%, helped revenue surge higher.
In addition to its core subscription business, BCE also boasts a massive media segment. The segment, which includes dozens of radio and TV stations, provides the company with an additional revenue stream.
BCE generates a healthy income
The defensive and diversified nature of BCE allows it to pay out a very impressive quarterly dividend. As of the time of writing, BCE offers a yield of 6.50%, making it one of the better-paying income producers on the market.
Additionally, prospective investors can expect annual or better increases to that dividend to continue, as they have for more than a decade. In fact, BCE has paid out dividends without fail for well over a century, making it a top telecom investment to consider.
Given the current yield, prospective investors who invest $20,000 in BCE (as part of a larger, well-diversified portfolio) can expect a first-year income of $1,300.
Additionally, those investors with longer-term horizons can reinvest that income until needed, bumping that income even further.
BCE trades at a discount now
There’s one final reason why investors should consider BCE as a top telecom investment right now.
Investments like BCE are dependent on debt for driving massive investments and growth initiatives. When interest rates rise, like they have this year, it increases costs and eventually leads to lower earnings.
As a result, overall market volatility has led to the stock dipping in recent months. In fact, year to date, the stock is flat, and over the trailing 12-month period, the stock is down approximately 7%.
What this means is that investors with a longer-term horizon can buy a top telecom investment at a discounted level. And it’s that long-term timeline that investors should focus on.
Will you buy this top telecom investment?
No stock is without some risk, and that includes BCE. Fortunately, BCE’s defensive business model, coupled with its diversified business and growing dividend, helps to minimize that risk.
In my opinion, BCE remains a top telecom investment that should be a core part of any well-diversified portfolio.
