Got $2,000? 5 Telecom Stocks to Buy and Hold Forever

The discount and recovery potential are reasons enough to consider telecom stocks in Canada right now. The fact you can lock in a solid yield is another compelling reason.

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The telecom sector in Canada is still facing regulatory challenges, which is reflected in the performance of telecom stocks. While this is a significant concern in the short-term, it’s a fantastic opportunity to buy some amazing telecom and 5G stocks at a heavily discounted price to hold long term.

BCE stock

BCE (TSX:BCE) has long remained the largest telecom company in Canada by market cap, but it’s less than $1 billion away from losing this title. That’s because it’s currently Canada’s most heavily discounted telecom giant — trading at almost 55% below its five-year peak, and the bear market phase is far from over.

Created with Highcharts 11.4.3Bce PriceZoom1M3M6MYTD1Y5Y10YALL6 Apr 20202 Apr 2025Zoom ▾Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '2520212021202220222023202320242024202520252030405060www.fool.ca

While BCE wasn’t a good growth stock even before the slump, it was a solid dividend buy. It still is, thanks to the 12% yield, but a dividend cut is anticipated. But until the company announces it, it’s worth considering this aristocrat for this formidable yield.

Telus stock

Telus (TSX:T) is the second-largest telecom company in Canada right now and closest to becoming the top one. It’s in the same boat as BCE, albeit “less sunk,” and trading at a 42% discount from its five-year peak.

Created with Highcharts 11.4.3TELUS PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Telus’s business model is almost the same as BCE’s, but it is also pursuing other avenues, particularly telehealth and home security. They don’t make a significant amount of the revenue mix compared to their core services, but they may offer significant growth opportunities in the future.

Also, even though the dividends are financially distressed, the company is still raising its payouts and offering dividends at an attractive 8% yield.

Rogers Communication stock

Rogers Communication (TSX:RCI.B) rounds up the trio of companies that control the bulk of the Canadian telecom sector. It also boasts the most extensive 5G network in the country and a massive reach, especially after the acquisition of Canada’s fourth-largest telecom company.

Created with Highcharts 11.4.3Rogers Communications PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Rogers is currently trading at a 44% discount from its five-year peak and has a price-to-earnings ratio of 14.8. It also offers financially stable dividends with a payout ratio of just 70.6%, but the yield is not nearly on par with the others at 4.7%.

Cogeco Communications stock

Montreal-based Cogeco Communications (TSX:CCA) is a relatively modest telecom stock with a market capitalization of $3.1 billion. Cogeco also has a strong presence in the U.S., serving the internet to people in 13 states. Its U.S. business makes up around 42% of its total revenue from this business segment.

Created with Highcharts 11.4.3Cogeco Communications PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Even though its revenue mix is a bit different from that of the three telecom giants, it took a significant hit when the sector slumped and is trading at 44% of its five-year peak. The valuation is quite attractive, and the yield is above 5.4%, making it an attractive dividend buy.

Quebecor stock

Another Montreal-based telecom Quebecor (TSX:QBR.B) is currently one of this list’s most stable telecom stocks. It’s trading at an 8% discount from its five-year peak. The stock also has a strong history of growth.

Created with Highcharts 11.4.3Quebecor PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

The stock is attractively valued and offers a dividend yield of around 4.1%. Considering its growth history, it may also provide decent capital appreciation potential once the regulatory trouble plaguing the telecom sector is over.

Foolish takeaway

The five telecom stocks are a decent buy right now, especially the four heavily discounted ones because once the dust settles and their regulatory troubles are over, the recovery-based growth might lead to significant returns. Their dividends are another compelling reason to take into account.

Should you invest $1,000 in BCE right now?

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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 recommends Cogeco Communications, Rogers Communications, and TELUS. The Motley Fool has a disclosure policy.

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