Forget BCE: This Dividend Heavyweight’s the Better Buy Today

Quebecor (TSX:QBR.B) stock doesn’t get much respect, even as it looks to take its wireless business into overdrive.

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BCE (TSX:BCE) stock is starting to become attractive for those who like massive dividends. Undoubtedly, amid BCE stock’s painful descent to multi-year lows, the stock briefly saw its dividend yield surpass the 9% mark. Though shares have edged higher (ever so slightly) such that the yield is now sitting at around 8.8%, it’s not hard to imagine many Canadian investors looking to chase the ailing telecom as a long-term deep-value play.

Undoubtedly, BCE must resolve some serious issues before its stock can sustain a rally to much higher levels. To make matters worse, higher interest rates and macro headwinds could persist longer. Though only time will tell when BCE can pick itself off the canvas, I think recent moves to restructure and drive efficiencies will be a small step in the right direction.

BCE stock: A great dividend king, but is it too risky for you?

Of course, until the rest of the telecom industry can heal, it may be difficult for the company to gain any serious traction. With that, I view BCE stock as an intriguing income option but a rather untimely one. Only time will tell if BCE stock will command a 10% yield. Even if it does, I’m starting to doubt its stability.

Though the payout seems sustainable, more salt added to the firm’s wounds may prove too much. In any case, one has to think that some chance of a future dividend reduction is already baked in. After all, how many near-9% dividend yields is an income investor inclined to view as 100% safe? Not many, I imagine.

Until BCE unveils a quarter that demonstrates it’s back on track, I’d hold off for now. I do not think there’s any need to be a hero by buying at $45 and change, given the horrid technical backdrop.

Instead, it may make sense to check out one of BCE’s cheaper rivals in the Canadian telecom scene.


When it comes to the Canadian telecoms, you’ll probably hear of them referred to as the Big Three. That includes BCE, Rogers, and one other telecom that isn’t Quebecor (TSX:QBR.B). Indeed, Quebecor may be a regional telecom play but one that new investors shouldn’t look past. Not while it looks to expand into markets beyond its home turf of Quebec.

With a nice 4.6% dividend yield and a stupidly low 10.1 times trailing price-to-earnings multiple, I view QBR.B stock as one of the cheapest ways to play the ailing telecom scene. Of course, the company’s ambitious national expansion will take many years of big investments. But I think it will pay off in the form of impressive, relatively low-risk growth, especially once rates turn lower.

Now down over 20% from its highs, QBR.B stands out as an impressive option for investors who don’t want to jump into the deep end with BCE quite yet. Recently, Quebecor expanded its discount wireless service, Fizz, into Ontario, Manitoba, Alberta and British Columbia. The move could be a big deal for cash-strapped Canadians who want to save money anywhere they can.

Could Fizz and Freedom be the key to next-level wireless growth?

Possibly. For now, investors are feeling the pressure from the last quarter of sub-par wireless growth. Though Q4 was solid overall, the wireless segment just isn’t heating up as quickly as many would like.

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 Joey Frenette 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

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