It’s rare to find a generous upfront yield alongside an impressive dividend growth trajectory and respectable share price momentum. For passive income investors, such a name would be timely enough to scoop up, even in the face of economic headwinds. Of course, chasing newfound momentum comes with its own share of risks, but if you’re a dividend investor who’s looking to play the long game, buying strong performers can still make sense, provided that the valuation is still modest and the fundamentals are on the uptrend.
In this piece, we’ll check out a cheap dividend stock that’s picked up traction and has left many of its industry rivals in the dust of late. Enter shares of telecom firm Quebecor (TSX: QBR.B), which currently yield just over 3.7%, even after experiencing a long-time breakout to new all-time highs just north of $38 per share.
Indeed, it may come across as a bit shocking to learn of a Canadian telecom whose shares are actually flirting with new highs. The entire industry has faced immense headwinds in recent years.
Even long-time blue-chip juggernaut BCE (TSX: BCE) made history by slashing its dividend by more than half just a few weeks ago. While investors may be starting to lose hope when it comes to the so-called Big Three Canadian telecom titans, I think that Quebecor remains in an enviable spot as it looks to disrupt the three giants that have fallen under so much pressure.
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QBR.B shares are heating up!
In my view, I believe shares of the Quebec-based telecom are worth trading into as it continues gaining ground while the incumbents fall at the hands of pretty pronounced headwinds. Indeed, Quebecor remains a fairly small fish ($8.8 billion market cap at the time of this writing) in a pond dominated by whales. That said, Quebecor seems to be in a prime position to continue making the most of a rather rough economy as its discount telecom brand Freedom Mobile gains market share from Canadians who are willing to make some compromises on network quality and coverage to save a boatload of money.
Recently, Quebecor scored 45% of new Canadian wireless customers, a figure that was much higher than expected. Indeed, Canadians want value, and Quebecor seems to be the firm to offer it. Personally, I think Quebecor has what it takes to bring out the best in Freedom Mobile, a brand that’s had a rather tough time really disrupting the Big Three wireless carriers.
Quebecor: The telecom disruptor?
While I think it’s a bit too early in the game to crown Quebecor as the ultimate industry disruptor, I think that a recession could help jolt QBR.B shares to even higher highs as it makes the most of its long-awaited breakout moment.
Quebecor CEO Pierre Péladeau sounded upbeat about his firm’s prospects as it goes against the Big Three in a bid to become telecom player number four. Under his leadership, I wouldn’t dare bet against Quebecor, especially as many Canadian consumers look to save money where possible. At just 11.45 times trailing price to earnings, shares look like a solid bargain.
