BCE vs. Telus: Which Telecom Belongs in Your TFSA?

BCE and Telus remain top Canadian telecom names, but one could offer a better balance of income and future growth.

Key Points
  • BCE (TSX:BCE) is benefiting from strong growth in AI-powered enterprise solutions and fibre expansion.
  • Telus (TSX:T) is building sustainable AI infrastructure while rapidly expanding its digital health business.
  • Both telecom stocks offer attractive dividends, but their long-term growth strategies look very different.

Telecom stocks have long been favourites among Foolish investors looking for dependable businesses, stable cash flows, and attractive dividends. Since wireless, internet, and digital connectivity services have become essential parts of everyday life, telecom companies tend to remain resilient even during uncertain economic periods. This factor alone makes them appealing for a Tax-Free Savings Account (TFSA), where long-term gains and dividends can grow tax-free.

But when it comes to choosing between two of Canada’s biggest telecom players, the decision might not be easy. One is leaning heavily into artificial intelligence (AI)-powered enterprise solutions and fibre expansion, while the other is building sustainable AI infrastructure and expanding its digital health footprint.

In this article, I’ll compare BCE (TSX: BCE) and Telus (TSX: T) to see which telecom stock may deserve a place in your TFSA right now.

voice-recognition-talking-to-a-smartphone

Source: Getty Images

BCE stock is leaning on AI and fibre expansion

Headquartered in Verdun, BCE remains one of the country’s largest communications companies with operations spanning broadband internet, wireless, television (TV), media, and business communication services. Its portfolio includes well-known brands such as Bell, Virgin Plus, Fibe, Lucky Mobile, and Northwestel.

After climbing nearly 5% over the last 12 months, BCE stock recently closed at $33.23 per share, giving it a market cap of roughly $31 billion. It also offers investors a quarterly dividend with a yield of 5.3%.

In the first quarter, BCE reported 4% year-over-year (YoY) growth in its consolidated revenue, helping its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rise by 2.9% from a year ago. At the same time, its net profit reached $667 million as management continued focusing on cost efficiency and higher-margin growth areas.

One of BCE’s biggest growth drivers lately has been its AI-powered enterprise solutions. Revenue from AI-focused solutions, including Ateko, Bell Cyber, and Bell AI Fabric, surged 113% YoY in the latest quarter. This rapid growth highlights how BCE is positioning itself beyond traditional telecom operations and tapping into the rising demand for enterprise AI infrastructure.

Looking ahead, BCE continues investing aggressively in next-generation connectivity. The recent launch of its 5G+ Advanced network across the Greater Toronto and Hamilton Area strengthens its wireless leadership and could support future customer growth as demand for faster connectivity keeps surging.

Telus stock is focusing on digital health and sustainable AI

Meanwhile, Telus has also been expanding well beyond traditional telecom services. The company operates across Telus technology solutions, Telus digital experience, and Telus health, giving it exposure to several fast-growing industries.

Telus stock currently hovers around $17 per share with a market cap of about $27 billion. Over the past month, the stock gained 5%. More importantly for income-focused investors, Telus currently offers a very high dividend yield of 9.7%.

Telus delivered total mobile and fixed customer growth of 262,000 in the first quarter, backed by strong demand for bundled services. Its consolidated service revenue increased by 1% YoY, showing the stability of its core telecom business even in a competitive environment.

What makes Telus even more interesting is its push into sovereign AI infrastructure. Its expanding Sovereign AI Factory network includes facilities powered by 98% renewable energy and advanced cooling systems designed to improve sustainability.

At the same time, Telus Health continues to emerge as a big long-term growth engine. In the latest quarter, this segment posted 11% YoY growth in both service revenue and adjusted EBITDA, while its services now reach around 170 million people globally.

The better TFSA telecom stock today

Clearly, both BCE and Telus bring strong long-term qualities to the table. BCE appears better positioned for balanced growth through its expanding AI enterprise business, fibre network investments, and media operations. Telus, meanwhile, looks really attractive for its massive dividend yield and growing exposure to digital health and sustainable AI infrastructure.

For TFSA investors prioritizing stability and growth potential, BCE may have a slight edge right now. While Telus’s yield looks tempting, ultra-high dividend yields aren’t always a positive sign, which makes BCE’s more balanced growth-and-income profile more attractive to me right now.

Fool contributor Jitendra Parashar has positions in Bce. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.

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