Which Is the Better Investment: BCE Inc. or Rogers Communications Inc.?

BCE Inc. (TSX:BCE)(NYSE:BCE) and Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI) are the largest telecommunications companies in the country, but which is the better investment today?

| More on:
The Motley Fool

Investors are often told to diversify investments by picking the better company of two or more that are in the same industry. When it comes to telecommunications and media companies, there are two juggernauts in the Canadian market place: BCE Inc. (TSE:BCE)(NYSE:BCE) and Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI).

Here’s a look at both of them to see which one represents a better opportunity for investors today.

The case for BCE

BCE has long been known as one of the best dividend stocks on the market. The company has been paying out a dividend at a fair rate for well over a century–something that very few companies can attest to doing. The current quarterly dividend stands at $0.68 per share, which, given the current stock price of $60.78, provides a very healthy yield of 4.49%. In the past six months the stock has risen by 6.6%.

Part of the reason why BCE can pay such a handsome dividend is because the company has vast infrastructure already set up. This allows the company to give a significantly higher payout ratio than some competitors.

That’s not to say that there’s no growth prospects for BCE. The BCE empire is far greater than telecommunications and media as the company owns radio and TV stations, agencies, and even sports teams. BCE is everywhere and constantly growing.

In the most recent quarter, BCE posted revenues of $5.2 billion.

Recently, the company announced the purchase of the smaller competitor, Manitoba Telecom Services Inc. in a deal worth $3.9 billion. The deal, which is subject to regulatory approvals, will add the Manitoban provider of phone, Internet, and wireless services to BCE, enhancing BCE’s reach into the western provinces.

The case for Rogers

Rogers is another notoriously known company with many of the same types of holdings as BCE. In fact, both Rogers and BCE are the primary owners of Maple Leaf Sports and Entertainment (MLSE) at 37.5% each. MLSE owns the Toronto Maple Leafs, the Toronto Raptors, and Toronto FC.

Rogers currently trades at $50.59, down 1.46% over the past six months. Looking over a longer period of a full 12 months shows the stock up impressively by 16.03%.

The company pays out a quarterly dividend of $0.48 per share, giving the stock a yield of 3.8%. Rogers’s dividend is by no means weak, but it remains secondary to the growth and yield offered by BCE.

In the most recent quarter, Rogers posted total revenues of $3.2 billion.

Last year, Rogers completed the acquisitions of both Mobilicity, a mobile virtual network operator, as well as a significant spectrum purchase from Shaw Communications Inc., another wireless competitor that operates mainly in the west of the country.

The better investment is…

BCE Inc. is in my opinion, the better of the two companies to invest in. That’s not to say that Rogers is a poor investment; both companies have significant growth prospects and provide a decent dividend to shareholders.

BCE, however, has a better dividend and has been more aggressively pursuing expansion over the past year to not only solidify its position as the largest telecommunications and media company in the country, but to also expand the distance between the top two.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou has no position in any stocks mentioned. The Motley Fool owns shares of ROGERS COMMUNICATIONS INC. CL B NV.  Rogers Communications is a recommendation of Stock Advisor Canada.

More on Investing

rising arrow with flames
Stocks for Beginners

These 2 TSX Stocks Could Triple in 5 Years

The strong long-term outlook of these two top TSX stocks could help them continue soaring in the years to come.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

2 High-Yield Dividend ETFs to Buy to Generate Passive Income

High-yield dividend ETFs can be major winners in any portfolio, offering diversification, returns, and security. But which are the best?

Read more »

jar with coins and plant
Dividend Stocks

Want $97 in Super-Safe Monthly Dividend Income? Invest $15,000 in These 3 Ultra-High-Yield Stocks 

Do you have a lump sum amount and are worried you will spend it all? Consider investing in dividend stocks…

Read more »

ETF stands for Exchange Traded Fund
Investing

Top 2 S&P 500 Index Funds

Investing in the S&P 500 index is cheap and effective via these two BMO ETFs.

Read more »

Hiker with backpack hiking on the top of a mountain
Investing

Aritzia and Lululemon: Top Apparel Stocks for 2025

These two Vancouver-based fashion icon stocks may be out of favour but worth a look.

Read more »

woman looks out at horizon
Dividend Stocks

Top Picks: 3 Canadian Dividend Stocks for Stress-Free Passive Income

Do you want passive income? These three offer not just strong passive income now, but a large future opportunity for…

Read more »

Illustration of data, cloud computing and microchips
Tech Stocks

Missed Out on Nvidia? My Best AI Stock to Buy and Hold

NVIDIA stock has certainly warranted a place among headlines, but with the recent drop in shares, this stock is a…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Investing

Got $7,000? These TSX Stocks Are Perfect for Your TFSA

Time to start preparing for the next TFSA contribution increase. Here are two TSX stocks ideal for a TFSA hold.

Read more »