Telecoms, Tech, and Trains: How Do 3 Very Different Canadian Stocks Compare?

With Open Text Corp (TSX:OTEX)(NASDAQ:OTEX) representing the best of Canadian tech, how do two other representative stocks compete for a place in your portfolio?

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Telecoms and trains are renowned dividend stocks, with just enough defensive qualities to keep the risk-averse long-term investor satisfied. Tech stocks, however, are key to certain types of capital gains investing, with the majority of shareholders’ income gleaned from buying low and selling high. So, how does one go about comparing these disparate stocks? Below, we’ll go through the data for a few representative big-name tickers on the TSX index and see how they stack up.

Rogers Communications (TSX:RCI.B)(NYSE:RCI)

The telecom pick for this list had a good year, growing its earnings by 20.3% and expecting a 7.9% annual rise over the next one to three years. The valuation is a bit hit or miss, though, with an acceptable P/E of 17.8 times earnings let down by a bloated P/B of 4.5 times book — although that per-asset valuation is by no means the highest on the TSX index. A dividend yield of 2.81% is on offer, though, while a 25% ROE in the past year would ordinarily signify a high-quality stock, this latter characteristic is let down somewhat by a high level of debt at 202.3% of net worth.

BCE (TSX:BCE)(NYSE:BCE)

The biggest direct competitor to Rogers Communications on the TSX index, BCE has a solid — if slightly underwhelming — track record with a five-year average past earnings growth of 6.5%, though there has been no earnings growth in the past year. It’s not quite the hot stock that Rogers Communications is right now, however, with more inside selling than buying taking place over the past three months.

That said, a dividend yield of 5.56% is on offer, with an 8.5% expected annual growth in earnings making that yield look all the more tempting. Valuation is likewise mixed for this telecoms stocks, with a P/E of 18.4 times earnings and P/B of 3.1 times book showing a similar profile to that of the previous ticker.

Open Text (TSX:OTEX)(NASDAQ:OTEX)

One of the sturdiest tech stocks on the TSX index, Open Text represents the best year-on-year growth of this selection of tickers with a one-year past earnings growth of 37.9% beating a five-year average growth rate of 12.1%. It differs from telecoms stocks in that it’s more overvalued, with a P/E of 38 times earnings, and it also has greater momentum, with a 30% expected annual growth in earnings ahead.

Open Text is similar to those telecom stocks in its amount of inside selling in the last three months, its payment of a so-so dividend yield (1.64%), and that fact that it carries a certain amount of debt, with a comparative level of 69.1% representing a mediocre balance sheet.

Canadian Pacific Railway (TSX:CP)(NYSE:CP)

At twice its future cash flow value, this darling of the TSX index dividend crowd is overvalued — see that P/B of 5.5 times book for a handle on intrinsic value. Canadian Pacific Railway ostensibly had a bad year, with a negative earnings-growth rate of -18.9% that lets down a positive five-year average of 16.2%.

For a famous dividend stock, its yield is pretty low at 0.99%, with an 8.8% expected annual growth in earnings on the pedestrian end of the scale. It’s seen more inside selling than buying of late, and though its 29% last-year ROE is significant, it’s let down somewhat by a mediocre balance sheet carrying a debt level of 131% of net worth.

The bottom line

We saw a mix of so-so valuations (see Rogers Communications’s PEG of 2.3 times growth and Canadian Pacific Railway’s P/E of 19.2 times earnings) and low expected earnings-growth rates. However, Open Text is the exception to this latter characteristic, with a cleaner balance sheet than BCE (with its debt of 118% of net worth), making the tech stock the best choice here for high growth mixed with passive income.

Should you invest $1,000 in OpenText right now?

Before you buy stock in OpenText, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and OpenText wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Victoria Hetherington has no position in any of the stocks mentioned. The Motley Fool owns shares of Open Text. Open Text is a recommendation of Stock Advisor Canada.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $5,000? 5 Income Stocks to Buy and Hold Forever

These income stocks have a solid dividend-payout history that can help you earn stress-free passive income.

Read more »

grow money, wealth build
Dividend Stocks

Why I’d Invest $10,000 in This Undervalued Dividend-Growth Stock for Decades of Income

This undervalued dividend stock offers a high yield of over 8% and can help you earn more than $200 in…

Read more »

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

Here’s Exactly How a $20,000 TFSA Could Potentially Grow to $200,000

Index funds like the iShares S&P/TSX Capped Composite Index (TSX:XIC) are tax free in a TFSA.

Read more »

Dividend Stocks

How I’d Invest $6,000 in Canadian Real Estate Stocks to Build Lasting Wealth

Canadian REITs on sale! See how grocery-anchored retail properties offering 9% yields could turn $6,000 into lasting wealth despite US…

Read more »

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

Economic Headwinds: Should You Still Consider Buying the Dip?

A market dip might seem like a bumpy road, but it can be far smoother in the future with the…

Read more »

e-commerce shopping getting a package
Dividend Stocks

Consumer Spending Plays Amidst the Current Market Dip

Consumption may go down in market dips, but certain consumer stocks are certainly better off than others.

Read more »