Have you invested in a telecom like BCE (TSX:BCE)? Canada’s telecoms are frequently noted as some of the best long-term options for investors to consider. And BCE stock is at the helm of those great telecom stocks.
Here are a few reasons why all investors should consider buying BCE stock right now.
BCE is a top defensive pick for any portfolio
First and foremost, BCE stock is a great defensive stock. Part of the reason for that is due to the nature of its business. Telecoms like BCE are among the most defensive picks on the market.
BCE’s core subscription business consists of TV, radio, internet and wireless segments. They are relatively stable and not greatly impacted by overall market volatility.
The defensive appeal for some of BCE’s segments, specifically the wireless and internet segments, has become more defensive in recent years. The reason for that view can be traced back to the shift to remote work during the pandemic, which has become a permanent change for many.
If anything, the segments continue to see strong growth, fueling what is already an impressive defensive moat.
By way of example, in the most recent quarter, BCE reported its second-best fourth-quarter (Q4) result in two decades for its retail internet segment. The 55,591 net subscriber activations in the quarter helped bump residential internet revenue growth by 5.4%.
The same could be said for the wireless segment, which registered 170,831 net subscriber activations in the quarter, bumping wireless service revenue by 3.9%.
In other words, BCE stock is a defensive option for nearly any investor and continues to see strong growth.
It trades at a crazy discount right now
Despite that growing revenue and stellar defensive moat, BCE stock trades at a discount right now. As of the time of writing, BCE stock is down nearly 30% over the trailing two-year period.
Some of that dip can be attributed to rising interest rates and inflation. Another more recent catalyst for that drop is BCE’s recent layoff announcement.
That being said, it is still a hefty discount on an otherwise great long-term pick that’s going through a rough patch.
The key point for prospective investors to note here is that BCE stock is a long-term investment that can provide both growth and income. The fact that the stock trades at a nearly 30% discount and is flirting with its 52-week low is gravy.
In short, this is a great time to pick up BCE stock at a huge discount.
BCE stock pays a high dividend to put on autopilot
One of the main reasons why investors flock to stocks like BCE is for the juicy dividends it offers. As of the time of writing, BCE pays an insane 8.08% yield on its quarterly dividend.
This means that investors who drop $40,000 into BCE as part of a well-diversified portfolio will generate an income of just over $3,230. And thanks to a tradition of providing annual bumps that goes back over a decade, that is just your first-year income.
Keep in mind that Investors who aren’t ready to draw on that income yet can reinvest it until needed. This allows any eventual future income to grow on autopilot. Oh, and BCE has been paying out dividends, without fail, for well over a century.
That fact alone makes it an income option for nearly any portfolio.
Final thoughts: Is it time to buy?
All stocks, even the most defensive carry some risk, and that includes defensive gems like BCE. Where BCE does differ, however, is in its defensive moat, reliable revenue stream, and juicy dividend.
In my opinion, BCE is a great investment that should be a core holding in any long-term, well-diversified portfolio.
Buy it now while it’s discounted, hold it, and then watch your future income grow.
