The 1 Canadian Telecom Stock I’d Consider Buying in February 2024

Blue-chip telecom stocks are often regarded as mainstays in many investor portfolios, and here are the reasons why I would consider it an excellent long-term holding in mine.

| More on:
Technology

Image source: Getty Images

The Canadian stock market has no shortage of blue-chip stocks. These high-quality stocks have top-notch underlying companies that are known for delivering solid long-term returns through capital gains and dividends to shareholders.

While the Big Six Canadian banks are the go-to blue-chip stocks that are staples in many investment portfolios, the telecom sector also boasts a few notable names that you can consider adding to your holdings.

Today, we will look closely at BCE (TSX:BCE), a leading Canadian telecom stock that can be a terrific addition to your self-directed investment portfolio for relatively safe and reliable long-term wealth growth.

BCE

BCE is a $48.41 billion market capitalization giant in the Canadian telecom space, holding around a third of the market share. The company offers nationwide coverage across its core subscriber units, from wireline to wireless internet and even TV business segments. The giant generates recurring revenue, which accounts for the bulk of its overall cash flows.

While known more for its telecom and internet services, it has several radio an TV stations under its belt that comprise its media segment. The company’s media segment business diversifies its income, supplementing the substantial revenue its core business already generates.

Telecom businesses provide essential services, especially in this day and age. The nature of its services gives BCE stock a defensive appeal, which has only increased in the last decade.

Moving forward, telecom and internet services will only become more important worldwide. The growing demand for its services is already reflected in its earnings. In its most recent quarter, BCE stock reported its second-best-ever quarterly performance.

Is it a good time to buy BCE stock?

As of this writing, BCE stock trades for $53.07 per share, down by 19.17% from its 52-week high. There are several reasons for the downturn in its share prices. One of the primary reasons could be considered the series of aggressive interest rate hikes by central banks in Canada and the U.S. to combat inflation.

Companies of all sizes, especially larger companies like BCE stock, rely on debt to fund capital projects. When interest rates are higher, the debt repayment expenses eat into profits, creating short-term financial pressure for these companies.

While these factors have dragged its share price to lower levels, potential investors can consider it an opportunity to invest in its share prices at a bargain. Once interest rates start being slashed, BCE stock’s share price can begin soaring. Investing in its share price right now can help it capture massive capital gains once it begins its recovery.

Foolish takeaway

Now, blue-chip stocks are nowhere near being immune to the effects of market volatility. However, these companies are well-capitalized enough and have solid enough businesses to weather macroeconomic jitters and emerge stronger on the other side of bear markets.

BCE boasts a consistent industry-leading position among Canadian telecoms, reliable dividends, and an excellent track record of delivering stellar long-term growth to its investors. Considering these factors, BCE stock can be a great pick to add to your holdings, especially when its share prices are down and its dividend yield is inflated to incredibly higher-than-usual levels.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

protect, safe, trust
Dividend Stocks

Income Investors: 2 Safe Dividend Stocks to Own for Passive Income for Years

Long-term passive-income stocks should ideally offer enough dividend growth to counteract inflation while preserving or growing your capital.

Read more »

analyze data
Dividend Stocks

The 1 Best Growth Stock on the TSX Today

Fairfax Financial Holdings (TSX:FFH) stock took a hit, but it's still a great growth play for the long-term.

Read more »

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Got $10,000? That’s All the Start-Up Funds You Need to Get Money for Doing Nothing 

Have you been delaying long-term investments for later? Investing money while you are working can help money work for you.

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Buy 32 Shares in This Glorious Dividend Stock and Create $1,074.88 in Passive Income

This dividend stock is also a growth stock you're going to want on your side over the next year and…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Retirees: 2 Dividend Stocks With High Yields to Buy for 2024

These TSX dividend stocks raised their distributions for 2024 and now offer high yields.

Read more »

Metals
Dividend Stocks

Could This Low-Performing Stock Make You a Millionaire One Day?

A low-performing stock is a buying opportunity today and could even make a you a millionaire in the future.

Read more »

HIGH VOLTAGE ELECRICITY TOWERS
Dividend Stocks

3 Things About Canadian Utilities Stock Every Smart Investor Knows

While its share price is down significantly from its all-time highs, Canadian Utilities stock can be an excellent holding to…

Read more »

A meter measures energy use.
Dividend Stocks

Down by 14.54%: Here’s Why Fortis Stock Is a Good Buy in February 2024

Are you thinking about investing in Fortis stock while its share prices are down? Here’s why it might be a…

Read more »