Communications services have been a hard-luck sector recently. This is surprising, as telcos provide essential products and services much like utilities. Dominant industry players have engaged in an aggressive pricing war, further extending its slump. Fortunately, I found a resilient buy candidate outside of the Big Three that is built to last.
Cogeco Communications (TSX: CCA) is dirt-cheap stock right now because of negative sector sentiment. At $56.10 per share, the year-to-date loss is 11.5%. However, income investors won’t have to walk a tightrope. The $2.4 billion regional broadband provider is a dividend gem with an impressive dividend-growth streak.
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Dividend growth and elevated passive income
Cogeco Communications doesn’t just offer a juicy 6.94% dividend yield, but boasts a 21-year dividend-growth streak. Despite broader telecommunications sector volatility, dividends remain well covered, with a low 51.3% payout ratio. On July 15, 2026, the board of directors approved a 7% dividend hike.
At the current price, a $7,000 investment in CCA buys approximately 124 shares. Your annual dividend income is $485.80, paid as $121.45 in cash every quarter. Assuming you reinvest the dividends instead of collecting them, the money will compound to $13,928.80 in 10 years. Invest through a tax-advantaged account like the Tax-Free Savings Account (TFSA) for tax-free growth.
Significant presence in North America
Cogeco Communications operates in Canada and the U.S., providing broadband internet, video, wireline telephony, and mobile wireless services to residential and commercial customers. Cogeco and Oxio are the primary brands in the home country, while Breezeline and Welo represent the American operations.
The North American telco’s core operational strengths include infrastructure and broadband reach across the region. Oxio and Welo, both standalone, direct-to-consumer internet service providers, focus on younger and digital-native demographics in Canada and the U.S., respectively.
The expansion of its wireless footprint, leaning toward digital-first brands, is ongoing to diversify revenue mix. Cogeco intends to move away from legacy cable systems and shift to higher-margin broadband service. Management also expects increased digitization to drive revenue, reduce costs, and enhance customer satisfaction.
In Q3 fiscal 2026 (three months ended May 31, 2026), free cash flow (FCF) rose 17.6% year over year to $169.2 billion. However, Cogeco incurred a net loss of $1.7 billion during the quarter, attributed to the recognized non-cash pre-tax impairment charges. Revenue fell 4.7% to $696.7 million compared to Q3 fiscal 2025.
Frédéric Perron, president and CEO of CCA, noted the intensified competitive environment across the border. “We are planning an optimization of capital investments going into next fiscal year, which will facilitate FCF generation,” he added.
Regulatory pressure adds to the volatility of Canadian telco stocks. CCA reached a peak of $76.45 on March 24, 2026, but has fallen 24.24% in the last six months. The good news is that FCF funds telecom dividends, not accounting income.
Final take
Cogeco Communications is one of the compelling dirt-cheap dividend stocks to buy on the TSX today. The modest cash payout ratio somehow assures dividend safety. I’d lock in the discounted price and reinvest the dividends while waiting for the price to appreciate. Lastly, the nearly seven-decade-old telco isn’t a fading legacy operator. The underlying fundamentals remain solid.
