Telus (TSX: T) and BCE (TSX: BCE) have been under serious pressure in recent years, to say the least. And while it feels tempting to punch a ticket to a former dividend darling at more than a 50% discount from peak levels, I do think that investors expecting results in the nearer term (let’s say the next 6–12 months) would probably be better off in a dividend payer that’s timelier.
While shares of T and BCE may very well be closer to the bottom than the top, there’s no guarantee that their turnarounds will happen quickly enough to mint bottom-fishers with quick gains that compensate for the level of risks taken on. Indeed, bottom fishing is hard, especially for investors who want to see results in the next year or two.
While I am a fan of the telecoms from a risk/reward perspective for the next five to eight years, I’m just not so sure what to make of them now that they’re looking to move on from painful dividend reductions. Indeed, they could become cash cows again, especially as their debt loads move lower and they focus returns on capital expenditures (on telecom infrastructure, AI, and more) and returning capital to shareholders.
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Quebecor
In any case, I find a name with solid past price appreciation could be a far wiser choice at a time like this, when it’s unclear whether turnaround plans will start to pay dividends again. In my view, a share-taking telecom such as Quebecor (TSX: QBR.B) looks like a much easier buy.
The stock has momentum behind it after gaining more than 45% in the past year, even with the latest 12% correction considered. Despite the nice momentum, which defies what it means to be a Canadian telecom these days, the shares look incredibly cheap at 15.2 times trailing price-to-earnings (P/E). Is this the cheapest that the Quebec-based telecom firm behind Freedom Mobile and Vidéotron has been?
Most definitely not. But at the same time, the fundamentals arguably look far better today than when the name was sporting a P/E multiple that was in the single digits. Indeed, if you seek single-digit P/Es, I find that BCE stock might be the better way to go.
For investors who want earnings momentum, improving fundamentals, and, perhaps most importantly, the ability to keep taking share in the Canadian telecom scene as it disrupts with its low prices, Quebecor stands out as a winner that wouldn’t surprise me if it just went on to keep posting wins for the rest of the year and into 2027.
What makes me most bullish about the firm is the momentum riding behind Freedom Mobile. As earnings continue flowing in and the value proposition (that’s price and network quality) continues to improve, Quebecor is well-positioned to continue chipping away at its debt load. Indeed, the balance sheet is the healthiest of the telecom cohort.
And, in my view, it’s going to get even healthier, even as the firm commits to expanding Fizz, its digital-focused banner, which is pretty much putting a new low floor on mobile data plans. As a disruptor with earnings power and a still-decent 2.9% yield, I’d rather go with the name than BCE and Telus, as they try to turn their shares higher again after their respective dividend resets.
