Global financial markets took a nasty tumble in the after-hours trading session as President Trump unveiled stiff reciprocal tariffs on a wide range of nations. Undoubtedly, depending on who you ask, the tariffs were heftier and more widespread than many anticipated, with the broad S&P 500 tanking north of 3% on Wednesday’s after-hours session of trade.
Meanwhile, the tech- and growth-heavy Nasdaq 100 crumbled like a paper bag, shedding close to 4.5% of its value at the time of this writing. Indeed, at this juncture, it looks like the S&P 500 is not only making a round trip to correction territory (marked by a fall of at least 10% from all-time highs) but en route to hit fresh, new year-to-date lows.
Indeed, the S&P 500 could be off anywhere from 10-14% from its high by the time investors have had the opportunity to digest the full extent of new tariffs laid out in a rough Liberation Day or Termination Day, as Ontario Premier Doug Ford referred to it. Indeed, those who expected a bottom or a bounce this week were left in a state of shock.
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Time to make a correction shopping list?
And while some very smart people, including Fundstrat’s Tom Lee, had a more optimistic view going into this week, it shows that even the best market strategists can get it wrong. With stocks at risk of a deeper correction and a recession that could come knocking this summer, it may be time to seek shelter in a more defensive dividend payer.
BCE (TSX: BCE) and Rogers Communications (TSX: RCI.B) are two names that dividend-focused value seekers may be inclined to buy on weakness. But if you’re in the market for both, which one should you buy more of, if at all? Let’s give each name a look as the two ailing telecoms look to ride out what could be a down year for Canada’s economy.
BCE
The telecom stocks have arguably already paid their dues, with shares already having shed more than half of their value from peak to trough. Though time will tell when they ultimately bottom out and begin to bounce, I think there’s potential deep value to be had by investors as the top telecom plays sink to new depths not seen in a long time!
BCE stock shed more than 4% on Wednesday’s session, adding to the already painful decline, closing in on 58% from peak to trough. Indeed, the yield is around 12.3% again.
And while a dividend cut looks like the only way out, I think that deep-value investors seeking a lower correlation (0.43 beta at writing) may wish to start picking up shares. Given the strong negative momentum, however, I’d be in no rush to load up here.
Rogers
Rogers shares have already been punished severely, with the name now down around 52% from its high. So, how much more pain could be in the cards? It’s tough to tell, but I view the 5.53% dividend yield as safer than that of BCE’s. Either way, I wouldn’t rush to pick it up, following the pricey $11 billion deal for 12 years of NHL broadcast rights. That’s very expensive, in my view.
Either way, I’d only suggest picking up a few shares if you’re a deep-value investor who can handle double-digit percentage pain from current levels. It’s a falling knife that could be tough to time. If you’re keen on the telecom plays, perhaps dollar-cost averaging between both (50/50) could make sense.
