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.
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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.
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.
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.
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.
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.
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.
