Canada’s telecom sector has traditionally been a popular place for dividend investors. Each company has millions of customers who pay regularly, nice pricing power, and diverse operations. This translates into consistent profits and steadily increasing dividends.
Is there one telecom stock that offers a particularly appealing dividend, or should investors just own all of them?
Some investors like Telus Corporation (TSX:T)(NYSE:TU) the best for a few reasons. It doesn’t have a media division, a part of the sector that has traditionally enjoyed lower margins. It has also delivered outstanding dividend growth and management has been aggressive in buying back shares.
Others like BCE Inc. (TSX:BCE)(NYSE:BCE), primarily because of its focus on acquisitions. It acquired the 46% of Bell Aliant it didn’t own back in 2014, and followed that up with agreeing to acquire Manitoba Telecom earlier this year. That deal is still waiting for regulatory approval.
Finally, many like Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) and its position as Canada’s wireless leader. But the company is losing market share to both Telus and BCE, and many investors hate the company’s massive $5.2-billion NHL television deal.
BCE shares currently have the highest yield of the three, coming in at 4.74%. Telus and Rogers have yields of 4.66% and 3.76%, respectively. All have payout ratios between 81% and 86% of earnings.
I’d be inclined to choose Telus as my favorite choice in the sector in Canada, but BCE also offers a great yield, solid dividend growth, and a comparable payout ratio.
