1 Top TSX Telecom Stock to Buy Right Now

Here’s why long-term investors seeking a top telecom stock to buy right now should consider Rogers Communications (TSX:RCI.B)(NYSE:RCI).

| More on:

Investors looking for consistent and meaningful long-term returns have often looked to the telecommunications sector. Indeed, finding the right telecom stock isn’t easy. However, in this era of rock-bottom bond yields, obtaining a similar yield, or perhaps even a better one, from a company with rock-solid, long-term prospects sounds like a good deal to me.

One of the best options for investors seeking a top-notch Canadian telecom stock is Rogers Communications (TSX:RCI.B)(NYSE:RCI). Here’s why I think investors should consider this stock right now.

Analysts high on this telecom stock

According to analysts, there’s a lot of upside to be had with Rogers stock relating to its upcoming merger with Shaw Communications (TSX:SJR.B)(NYSE:SJR). Indeed, this mega merger represents continued consolidation in the telecom sector. Like many sectors, Rogers is a telecom stock that benefits from increased scale over time.

Rogers expects to be able to double its wireless footprint nationally as a result of this deal. Additionally, this stock is likely to remain pinned around its current levels until the merger goes through (or not). Accordingly, investors banking on the synergies and value that can be created as a result of scale may have an intriguing entry point here.

This acquisition is likely to complete in Q2 next year, assuming all the regulatory hurdles can be managed along the way. Some divestitures are likely. However, Rogers believes this deal can provide great upside over time.

The company’s average analyst price target of $72 per share at the time of writing represents significant upside from here. Indeed, I tend to side with the analysts on Rogers stock and view this as a great long-term holding at a reasonable price right now.

Bottom line

The Rogers-Shaw deal is a whopping $28 billion combination including debt. Accordingly, this deal remains subject to various regulatory approvals. There remains significant risk with betting on this stock one way or the other right now.

Currently, the Canadian Radio-television and Telecommunications Commission (CRTC) and The Competition Bureau are in charge of scrutinizing this deal. The CRTC is in charge of reviewing broadcasting rights transfers.

Additionally, the Ministry of Innovation, Science is handling the transfer of spectrum — licences to transmit wireless services. Additionally, there are other departments looking at competition concerns around this deal.

Accordingly, there are a number of departments Rogers will need to please over the near term.

That said, I think Rogers still remains undervalued relative to its long-term total return prospects. This is a telecom stock with a fantastic track record of providing excellent dividend income and capital appreciation over time. Nothing has changed on that front.

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 Chris MacDonald has no position in any stocks mentioned. The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV.

More on Dividend Stocks

investment research
Dividend Stocks

Best Stock to Buy Right Now: TD Bank vs Manulife Financial?

TD and Manulife can both be interesting stock picks for today, depending on your investment style.

Read more »

A worker gives a business presentation.
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

These stocks are out of favour but could deliver nice returns over the coming years.

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 5.5 Percent Dividend Stock Pays Cash Every Month

This defensive retail REIT could be your ticket to high monthly income.

Read more »

Confused person shrugging
Dividend Stocks

Passive Income: How Much Do You Need to Invest to Make $600 Per Month?

Do you want passive income coming in every single month? Here's how to make it and a top dividend ETF…

Read more »

Canadian Dollars bills
Dividend Stocks

3 Monthly-Paying Dividend Stocks to Boost Your Passive Income

Given their healthy cash flows and high yields, these three monthly-paying dividend stocks could boost your passive income.

Read more »

Make a choice, path to success, sign
Dividend Stocks

The TFSA Blueprint to Generate $3,695.48 in Yearly Passive Income

The blueprint to generate yearly passive income in a TFSA is to maximize the contribution limits.

Read more »

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »