The market’s top dividend heavyweights probably won’t command jaw-dropping yields forever once the Bank of Canada finally decides to move forward with rate cuts. Undoubtedly, the broader basket of dividend plays has had to compete with more bountiful fixed-income securities. As rates fall, though, the battle for yield could get a tad tougher, and those bountiful 6% yields on high-quality Canadian blue chips may be fewer and farther between.
In this piece, we’ll look at two of the most intriguing dividend plays in the country in telecom top dog BCE (TSX:BCE) and well-run regional telecom firm Quebecor (TSX:QBR.B). Let’s check in with the two names to see if they’re worthy bets for passive-income investors seeking to give themselves some sort of raise.
BCE
At around $50 per share, BCE stock is pretty much back to the depths not seen since the worst days of the 2020 stock market crash.
Undoubtedly, the $46 billion telecom firm’s downward spiral began all the way back in 2022. Since then, shares have been on a very painful ride, punishing the dip-buyers who dared grab it. Indeed, BCE stock will eventually bottom out. And at fresh multi-year lows, there’s no better time than now. But that’s no reason to step in against the grain unless you’re willing to deal with near-term pain for a shot at long-term gain.
The stock yields a staggering 7.93% at writing. That’s close to the highest it’s been in recent memory. After shedding nearly 32% of its value from peak levels, BCE stock seems to be a risky bet as the firm looks to restructure itself after its recent mass layoff in the Bell Media division.
Though there are issues, I think they’re pretty fixable. And that’s why I’d be willing to be a net buyer on the dip. For now, the dividend looks relatively safe. However, a discussion of the stock’s dividend safety could be a larger focus with every major downward move from here.
At the end of the day, I’m a fan of BCE’s telecom business and its ability to grow on the other side of a potential economic slowdown. As the firm continues to invest in wireless infrastructure, I think the long-term benefits will begin to shine through.
Quebecor
Quebecor may have the smaller dividend yield, but it also looks to have the safer payout, with the yield currently sitting at 4.25%. The stock has flatlined over the past five years. And though the Quebec-based telecom firm with bold national expansion ambitions doesn’t appear to be headed anywhere higher anytime soon, I view the telecom as the most compelling for those looking to grow their wealth over the next 10-15 years.
Indeed, once rates fall and Quebecor is able to gain traction on its expansion, the stock could prove to be severely undervalued. At 11.1 times trailing price to earnings, QBR.B looks way too cheap to count out, even after a good (but not incredible) round of third-quarter earnings results. In any case, QBR.B is worthy of one’s dividend watchlist right here at $31 and change.
Though BCE’s dividend is more tempting, I view QBR.B stock as the better buy at this juncture.
