Is your portfolio diversified? Establishing a portfolio that can earn passive income is one of the primary objectives of any investor. Fortunately, the market gives us plenty of options to choose from.
Canada’s big telecoms can provide a means to earn passive income. This is despite the telecoms being viewed as solely defensive holdings by many investors.
Why not consider one of Canada’s big telecoms?
Canada’s big telecoms offer investors a stable income stream and some serious defensive appeal. BCE (TSX:BCE) is the one telecom stock that investors looking to earn passive income should turn to.
For those unfamiliar with BCE, the company operates a massive media segment in addition to its core subscription offerings. That media segment includes dozens of radio and TV stations that blanket the country. The segment is also a complementary revenue stream to its core business.
That core subscription business includes wireline, wireless, internet and TV services, which provide an ample defensive moat for would-be investors.
Prospective investors should note that the defensive appeal of those core services has only increased since the pandemic started. This is because the need for a constant and fast internet connection has become a necessity for many – specifically, the many office workers who now operate in a remote or hybrid working capacity.
That growth continues well beyond the pandemic. By way of example in the most recent quarter, BCE reported a 10.2% increase in retail internet activations. In fact, the most recent quarterly update saw 24,932 activations in the quarter, which was the strongest figure since 2007.
The wireless segment is also a noteworthy consideration. The segment has witnessed incredible growth over the past several years. In fact, in the most recent quarter, BCE saw wireless service revenue surge 4.4%. This reflects an incredible 18-year high in postpaid activations.
And perhaps most importantly, that increase isn’t slowing. There’s a unique opportunity for investors to earn passive income right now.
Earn passive income from BCE – here’s how
As an income-producer, BCE really shines. The company has been paying out dividends to investors for well over a century without fail. BCE has also provided investors with a generous annual uptick to that dividend going back nearly two decades.
Today that dividend works out to an appetizing 7.39%, making it one of the better-paying options to earn passive income on the market.
It also means that investors who allocate $30,000 to BCE (as part of a larger, well-diversified portfolio) can expect to earn an income of $2,260 in just the first year. And keep in mind that investors with longer investment timelines can opt to reinvest those earnings, allowing them to grow further.
In other words, BCE is a great buy-and-forget option for any well-diversified portfolio.
One last word on BCE
BCE is a stellar long-term pick for those investors who have longer investment horizons. Part of the reason for that is the market volatility we’re seeing right now. Rising interest rates over the past year have put pressure on debt-heavy stocks like telecoms, causing them to dip considerably.
In the case of BCE, that dip translates into a 13% drop in the trailing 12-month period and an 18% dip in the past two years.
For those longer-term investors, this means BCE is an ideal long-term holding to buy now at a considerable discount. And until the market recovers (which it will), investors will continue to earn passive income from this stellar long-term gem.
