Some of the best long-term stocks to own are those that can provide growth, offer some defensive appeal, and pay out a handsome dividend. One such stock to consider is BCE (TSX:BCE), and here are a few reasons why BCE is a no-brainer dividend stock for any portfolio.
Let’s start with the obvious – BCE is defensive
BCE is huge. The company is one of the largest (or the largest, based on your metric) telecoms in Canada. BCE’s core subscription services include wireless, wireline, TV and internet services, which blanket the country.
More importantly, the infrastructure behind that core business is incredibly defensive. Telecoms are expensive operations to build and operate. To even consider a new competitor to challenge BCE’s position in coverage would cost tens of billions and a decade or more in work.
And that’s not all.
BCE boasts a huge media segment which includes dozens of radio and TV stations that complement the core business. Additionally, it provides an alternative revenue stream to that core business.
Perhaps most importantly, we have the nature of BCE’s business itself. BCE’s core business provides a necessary service to customers across Canada. That appeal runs true for both the wireless and internet segments since the pandemic started.
BCE is on sale right now
Despite running a diversified and extremely defensive business, BCE trades at a discount. In fact, over the trailing 12-month period, the stock is down by 12% as of the time of writing. Looking out over a longer two-year period shows a drop of just over 17%.
Part of the reason for that dip can be attributed to rising interest rates. Rising interest rates make capital-intensive businesses that are reliant on borrowing more expensive. This translates into thinner margins and slower-than-expected growth.
Fortunately, for investors with longer-term horizons, there’s a silver lining. As the market improves, and as interest rates level off or even drop, BCE’s stock will begin to rise.
That means investors who buy at the current discounted level will see significant gains from this long-term no-brainer dividend stock.
BCE is a no-brainer dividend stock
One of the main reasons why investors continue to flock to BCE is because it is a no-brainer dividend stock. The company boasts a quarterly dividend that currently carries an insane yield of 7.09%. This fact alone makes it one of the better-paying dividends on the market.
Adding to that appeal is the fact that BCE has paid out dividends for well over a century without fail, and has provided annual upticks for over a decade.
This means investors with $30,000 to invest in BCE will generate an income of $2,120. Perhaps best of all, investors who aren’t ready to draw on that income yet can choose to reinvest it, allowing it to grow further.
In my opinion, BCE is a superb long-term pick for income-seeking investors looking to add to a well-diversified portfolio. The juicy yield, defensive operation and current discount make the stock a no-brainer for those looking for long-term gains from a dividend stock.