The TSX has been on a roller coaster ride for over a year now. As of this writing, the S&P/TSX Composite Index is down by 5.44% from its 52-week high. The weakness in the Canadian benchmark index indicates declining share prices of publicly traded companies across the board, including Canada’s top telecom stocks.
While telecom stocks taking a beating might not seem reassuring to many, savvier investors might consider it a good opportunity to lock in higher-yielding dividends. Canadian telecom companies are well known for offering reliable payouts backed by revenue from the essential services they provide.
Despite the market correction weighing heavily on stocks across all industries, telecom stocks can be excellent investments to buy and hold for dividend income and long-term capital gains. In this piece, we will check out Canada’s top two telecom stocks to see which can be a better fit for your self-directed portfolio.
Telus
Telus (TSX:T) is a $34.55 billion market capitalization giant in the Canadian telecom industry and one of the Big Three wireless service providers in the country. With around 30% of the total market under its belt, it provides various essential services to over nine million customers nationwide.
While the growing borrowing costs have impacted Telus stock, much like the rest of the industry, it is still growing its customer base. The company’s restructuring costs have negatively impacted its profits, but the stock has a solid track record of consistent and profitable growth. Having grown its payouts to shareholders regularly, it can be a great asset to own for dividend income.
As of this writing, Telus stock trades for $23.77 per share, boasting a juicy 6.33% dividend yield.
BCE
BCE (TSX:BCE) is a $48.48 billion market capitalization giant that is the largest of the Big Three telecom companies in Canada. The wireless and internet service provider has roughly over a third of the market share of Canadian customers that rely on it for wireless, broadband, television, and landline phone services in the country. BCE is also the leading Canadian telecom in the 5G space.
Higher borrowing costs have had an impact on the company. However, the management’s decision to make cuts in its media division ensures more safety for shareholder dividends.
BCE uses debt to partially fund its capital programs. While growing interest expenses have put a dent in its profits, the company’s cost-cutting measures elsewhere provide some peace of mind to concerned investors. BCE looks well positioned to continue its 15-year dividend-growth streak.
As of this writing, BCE stock trades for $53.17 per share, boasting a juicy 7.28% dividend yield that you can lock into your portfolio today.
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Foolish takeaway
Whether we see a major market correction soon is impossible to predict. If it happens, share prices for BCE stock and Telus stock can see further declines before a potentially abrupt recovery. Regardless of broader market conditions, the two Canadian telecom giants keep adding to their customer bases.
The demand for their services will likely only increase in the future, accompanied by stronger cash flows. When it comes to adding the shares of these stocks to your self-directed portfolio, either can be a good fit. If I were to pick one, I would choose BCE stock for its industry-leading position and higher-yielding dividends at current levels.
