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The market is full of stellar long-term options that can cater to both growth and income-seeking investors. Value investors can take solace in knowing that they, too, have plenty of options to consider right now.
Here’s a look at some of those options for value investors to consider.
The telecom that’s trading down
Most investors are aware of BCE (TSX:BCE). BCE is one of the largest telecoms in Canada, boasting sizable wireless, wireline, TV, and internet segments. Those core subscriber-based segments generate a recurring revenue stream for the company.
Despite that defensive appeal, the stock has come under pressure in recent years. The underlying driver for that includes the longstanding impact of rising interest rates, which led to the company slowing its growth plans and then adopting deep cuts.
Those deep cuts included selling off a chunk of its media portfolio as well as its interest in MLSE. But rather than use those sale funds to pay down debt, BCE acquired U.S.-based Ziply Fiber.
To say that BCE is in a state of flux would be an understatement. The company is focusing on its core business in areas where it can expand (specifically, the underserved U.S. market). This means that the Ziply deal could be profitable, but it will be a long, sometimes painful wait for investors.
As of the time of writing, BCE trades down 36% over the trailing 12-month period. During that same period, the yield on BCE’s quarterly dividend has swelled to an insane 11.90%.
That also makes BCE’s dividend one of the highest yields on the market. Prospective investors need to know that BCE has already announced it was suspending its annual uptick to that yield as part of its cost-cutting efforts.
Reading a little deeper into those efforts, a cut to that insane dividend wouldn’t be too unreasonable of an ask either at some point. Still, the dividend is there now, and it is an opportunity.
Value investors should see BCE as an undervalued rough gem with plenty of long-term potential. The key phrase there is long term, as there’s plenty of short-term volatility still to come.
In the interim, long-term investors can take solace in taking in that juicy yield and buying BCE at an insanely discounted price.
The retailer with plenty of upside
Another well-established name among Canadian investors is Canadian Tire (TSX:CTC.A). Canadian Tire is one of the oldest and most well-known retail stocks in the country.
Apart from its namesake, the Tire has expanded into other segments over the years, including sporting goods, clothing, and party supplies, to name just a few. And perhaps more importantly, the company has worked hard to build out a strong brand portfolio across multiple channels over the past years.
This includes one of the best loyalty programs in the country and is an enviable adoption within the digital commerce space.
Those developments have led to a string of strong results for the company, allowing it to invest in growth initiatives and seek out new acquisition targets.
But despite those impressive gains, Canadian Tire has seen its stock price drop over 25% in the trailing 12-month period. This represents a unique opportunity for investors to grab a superb long-term growth and income play at a discounted rate.
Speaking of income, the recent dip in Canadian Tire’s stock price has resulted in that quarterly dividend yield surging to a juicy 3.70%.
Value investors: Are you on board?
All stocks carry risk, even the most defensive ones. And while both Canadian Tire and BCE offer significant growth prospects, they also have risks.
That’s part of the reason why value investors should look at both stocks as long-term holdings rather than short-term plays.
In other words, buy them, hold them, collect those dividends, and wait for the stock price to recover.
