Could BCE Stock Help You Become a Millionaire?

There are plenty of stocks on the market right now that can, with reinvestments and patience, help you become a millionaire.

| More on:
Happy retirement

Image source: Getty Images

Is your portfolio diversified? Telecoms are often regarded as some of the best long-term options to add to any well-diversified portfolio for both seasoned and new investors alike. Chief among those telecom stocks is BCE (TSX:BCE), which is often regarded as the telecom to own. But can this gem of a stock help you become a millionaire?

Let’s try to answer that.

BCE is everywhere, and evolving – That’s a good thing

BCE is one of the largest, if not the largest telecom in Canada. It offers subscription-based wireline, wireless, internet, and TV services. The company also operates a large media segment that provides an alternative, yet complementary source of revenue.

Telecoms like BCE are regarded as being some of the most defensive options on the market. In fact, that appeal has only grown in the years since the pandemic started.

Investors should note that the inflation which led to rising interest rates last year has spilled over to all parts of the market, including BCE’s. Telecoms are capital-intensive businesses that rely on debt to fund expansion and when free cash doesn’t cover it, dividends.

Recently BCE announced a series of layoffs to trim its workforce and costs. Specifically, the telecom is looking at annualized cost savings of $250 million by shedding nearly 9% of its workforce.

Those cuts include shuttering some of BCE’s radio stations in what the company refers to as a transformation. That transformation is from a traditional telecom to a provider of tech services and digital media.

To accomplish that feat, the company is partnering with Best Buy Canada to rebrand The Source stores into Best Buy Express outlets.

It’s an intriguing thought, but will that venture help you become a millionaire?

The income is very attractive

One of the main reasons why investors turn to BCE is for the dividend it offers. And it’s that dividend which can help you become a millionaire over the longer term.

As of the time of writing, BCE pays out a quarterly dividend, with a yield of 7.96%. That makes BCE one of the highest-paying yields on the market, which is insane considering the stock’s defensive appeal.

To illustrate the earnings potential of that insane yield, let’s assume an investment of $40,000 is made in BCE (always as part of a larger, well-diversified portfolio). For that initial outlay, investors can expect to generate a first-year income of just over $3,170.

The reason I say first-year is because investors who aren’t ready to draw on that income yet can choose to reinvest that income. This allows any eventual income to grow, and by extension, lets BCE help you become a millionaire.  

Oh, and let’s forget two other key points to consider. First, BCE has been paying out juicy dividends for well over a century without fail. BCE has also provided annual upticks to that dividend for over a decade. This fact alone makes the stock a great long-term option to help you become a millionaire.

Second, and perhaps more importantly, BCE trades at a big discount right now. As of the time of writing, BCE trades less than a dollar off its 52-week low. Looking out over the prior two-year period we can see the stock trading down 24%.

The bottom line: BCE can help you become a millionaire

No stock is without some risk, and that includes defensive top picks like BCE. That’s part of the reason why investors are often told to diversify their portfolios with a broad number of positions from different segments of the market.

So then, can BCE help you become a millionaire? It’s not a straight yes or no answer, but let’s just say yes, but not on its own. BCE still needs to be part of a well-diversified portfolio.

In short, BCE is an excellent long-term option to consider, particularly now that the stock still trades at a juicy discount.

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 Demetris Afxentiou has positions in BCE. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

STACKED COINS DEPICTING MONEY GROWTH
Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how a historical investment in TSX dividend stocks would have fared.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

Passive Income: How Much Should You Invest to Earn $100 Every Month

Want to earn an extra $100 per month in investment passive income? Here's how much cash you would need to…

Read more »

Canadian Dollars
Dividend Stocks

Buy 1,430 Shares of This Super Dividend Stock for $1,000/Year in Passive Income

Here's how to generate $1,000 in annual passive income with Dream Industrial REIT (TSX:DIR.UN) stock.

Read more »

A worker gives a business presentation.
Dividend Stocks

Ranking Inflation Rates in Canada: How Does Your City Stack Up?

Inflation rates stoked higher for some cities, but dropped for others. So let's look at how your city stacked up,…

Read more »

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

Inflation Is Up (Again): What Investors Need to Know

Inflation ticked higher in Canada this month, but core inflation was lower. Here's how investors can take advantage during this…

Read more »

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

Want to Make $10,000 in Passive Income This Year? Invest $103,000 in These 3 Ultra-High-Yield Dividend Stocks

Can you earn $10,000 in passive income in 2024? You can by investing $103,000 in these ultra-high-yielding stocks.

Read more »

Payday ringed on a calendar
Dividend Stocks

1 Under-$50 Dividend Stock to Buy for Monthly Passive Income

First National Financial (TSX:FN) is a high-yield monthly-pay dividend stock.

Read more »

Increasing yield
Dividend Stocks

Income Investors: Don’t Miss These High-Yield Deals

These great Canadian dividend stocks now offer high yields.

Read more »