BCE, or better known as Bell Canada has been a staple in the Canadian telecommunications market since the dawn of the industry. In fact, it’s probably one of the best Canadian stocks to buy in the country.
These types of stocks are great additions to a portfolio looking for some market crash defense and healthy dividends. They are often stocks that beginners just learning how to invest avoid, and it’s very likely a mistake.
Bell itself has a nice edge being well diversified in not only telecommunications but media as well, with many television and radio subsidiaries.
The company will likely maintain a hold rating or better being a strong company that has its hands in many jars for Canadian media and communications. However October 2018 would have been a nice entry point kicking up about 25% from then to now, crushing Telus which is up about 7% in the same amount of time.
Who is the better bet? TSE:BCE or TSE:T
When we look at how Bell has performed we could say that Bell has had the upper hand in the match up.
But there are other factors at play that could signal that Telus would be the better contender going forward.
Dividends are an important one for these companies as most people look at them for that allocation in their portfolios. When you want to include some income stocks in your basket, you are probably looking over the telecommunications giants.
In this regard Telus is looking like a stronger dividend going forward with plans to raise dividends 7-10% annually over the next 3-4 years. BCE has been keeping up with roughly a 5% increase annually, but Telus has nearly doubled that rate, increasing by 9% annually over the past 5 years.
The companies aren’t a bargain price wise, but both have the means to provide safety, slight growth, and income over the long run no doubt.
Lets compare some metrics to see what the future could look like:
- Price/book: 3.61
- PEG: 4.93
- P/E: 19.91
- Analysts expect BCE to grow earnings by 3.6% over the next 5 years.
- Price/book: 2.72
- PEG: 3.49
- P/E: 16.35
- Analysts expect Telus to grow earnings by 4.7% over the next 5 years.
When we consider this information, BCE is trading above its historical averages in many areas. They have seen a significant increase over the past year but the growth potential going ahead might not warrant the price.
Telus hasn’t seen the grand appreciation in stock price but is trading at cheaper valuations with similar but slightly better growth potential going forward. However, it’s impressive to see the company moving forward in acquisitions in the security space.
So BCE may have crushed the last 12 months, but I personally think Telus may be the better buy right now, as the market hasn’t rewarded this stock for its excellent performance thus far.