I’m a sucker for dividends so here’s why I’m Buying BCE and Telus. First off, I’ve been a dividend investor ever since I started investing. Back then (2007) average yields were in 4 to 5 per cent range. Today, a dividend investor with a long term investment horizon can lock in some juicy yields well above 6%. The key to this winning strategy is patience while you collect some eye popping dividend payments!
Nowadays people are really struggling with inflation and the astronomically high cost of living. In the investing space, AI stocks are all the rage and crypto has had a resurgence with Bitcoin leading the way. This all seems pretty bubbly to me so I’ve stayed away for the most part.
Where I am seeing value is in the so-called old economy stocks and in particular beat up stalwart dividend payers like utilities, pipelines and, yes of course, telcos. This is not investing advice and everyone should do their own research but my opinion is that it’s time to buy.
These stocks have been crushed under the high interest rates lately because they typically have a lot of debt. At the time of writing BCE shares trade at about $46 and yield 8.68%. Telus is at $21.40 and yields 7.01%.
BCE has announced layoffs and asset sales in an effort to right the ship. This restructuring will obviously take some time to play out. There’s also the recent CRTC decision about competition in Canada that’s affecting the telcos. Designed to try to level the playing field by allowing new entrants access to the Big 3 telco networks, I don’t see this as a big game changer. After all, how many discount wireless operators have come and gone in this country?
In the meantime BCE shares are depressed because investors fear a dividend cut. I don’t think that’s likely but investing by its very nature is risky. Telus is in a bit better shape but it shares a lot of the negative sentiment affecting BCE.
So that’s a pretty ugly backdrop. The upside is that we’ll likely see some rate cuts at some point. When that happens these beat up stocks will recover a lot of lost ground. At some point too, we’ll likely see a government change and when that happens maybe the next government will have more pro business, pro growth policies that will see global investor capital return to Canada. So a rising tide lifts all boats.
In the meantime I get to collect some hefty dividends and as I’ve said a million times before…The No. 1 problem most people have is that they don’t have enough money. Dividend investing is a way for people to slowly build wealth and increase their income over time. It’s been around forever and has been a reliable way for people to earn passive income and fund their lifestyles and retirements.
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