Telcos, Telecoms, The Big Three, whatever you call them, they are a force to be reckoned with and part of our every day lives whether we like it or not (unless you down own a cell phone, or use the Internet, or watch cable television, or call from a land line).
I know that the owners of this site a big fans of index investing and Exchange Traded Fund Investing, whereas I enjoy the risk somewhat in picking stocks myself for the most part. At only $4.95 per trade (see my detailed Questrade review) I can afford to invest in individual stocks cheaply and effectively.
I am a big fan of dividend investing as you know, and I think that telecom stocks are a great component of any dividend investing portfolio in Canada. A lot of people consider telecom's essential (when was the last time you went without Internet? Internet has become as “essential” as electricity, for some people) and consider them to be on par with utilities.
That being said, it is a very competitive environment, with new players in the game all the time. Also, people are ditching their cable television and their home phones by the droves, and opting for Internet based television like Netflix or Apple TV, and using cellular phones instead of a land line.
The telecoms have actually made me the most money in my portfolio. I bought Bell at some point during the recession and have gained over 30% from the purchase price. I also own Telus, but only 50 shares.
I thought I'd highlight some telecom stocks that might be of interest to you.
Please take these suggestions and considerations with a grain of salt, I am no means an investing guru! Just opening up discussion, is all 🙂
BELL (TSE: BCE)
The current price is $43.60 at the time of writing (June 2013), down from a 52 week high of around $48. The annual dividend yield which is paid out on a quarterly basis is 5.34%. The P/E ratio is 13.57 which is not bad, but it has been better. In March 2013, they increased their dividend payout from 56.75 cents to 58.25 cents, which is an increase of 2.6%. I own this stock myself and it has been one of the top performers.
TELUS (TSE: T)
The current price of Telus is $33.54 at the time of writing (June 2013), which is down from a 52 week high of almost $38). The annual dividend yield which is also paid out on a quarterly basis is 4.05%. The P/E ratio of Telus is 16.52, which is on the high side. In April 2013, they did a 2 for 1 split. They recently increased their dividend payout to 34 cents per share from 32 cents per share in June 2013. I currently own only 50 shares of this stock and I'm at a capital loss (only a small amount). Funny, as I am a 10+ year Telus mobility customer you would think I would own more shares.
ROGERS (TSE: RCI.B)
The current price of Rogers is $46.45 at the time of writing (June 2013), which is down from a 52 week high of $52.75. The annual dividend yield, which is paid on a quarterly basis, is 3.75%, which is not as generous as the other two Big Three yields. The P/E ratio of Rogers is 13.79. They also recently increased their dividend payout from 39.5 cents per share to 43.5 cents per share, which is an increase of more than 10% in the first quarter of 2013. Previous to that, the payout was 35.5 cents in 2011. I currently do not own this stock. Rogers has seemed to do okay despite having their Rogers videos stores all close down thanks to the advent of Netflix and other internet streaming movie rentals.
SHAW (TSE: SJR.B)
Shaw is by far the most affordable Telecom. It isn't involved as a cell phone provider, and it is mainly a home phone, cable television, and internet service provider. It services the west coast of Canada (just like how Telus started, remember BC Tel?). The current price of Shaw is $22.80 (June 2013). The current annual dividend yield, which is on a monthly basis is 4.47%. The P/E ratio of Shaw is 13.53 which is comparable to Bell and Rogers. They have been increasing their monthly yield as well on a consistent annual basis. The most recent increase was in March 2013 as well. Shaw increased it from 8.0833 cents per month to 8.5 cents per month, which is an increase of 5.2%. I do not own this stock, but have used Shaw services in the past! In fact, they had the Shaw student plan, which unfortunately doesn't exist anymore (at least that's what they tell me when I call- not sure if I believe them haha).
Editor's Note: If this whole stocking picking thing isn't for you, you might want to consider one of Canada's robo advisors. These services are growing by leaps and bounds as Canadians look for an easy way to invest and a “set it and forget it” solution to their investing needs. Check out this review our preferred robo advisor and snag a Wealthsimple promo offer code that leads you try the robo world out for free!
Readers, do you have any Canadian dividend paying telecom favourites?