Best Canadian Telecom Stocks

The communication sector is a stable sector akin to the railway industry where the companies operate in an oligopoly. While newcomers are allowed in by leveraging the infrastructure of the big telecoms, they historically have provided a sub-standard service but a lower price. Over the years, unfortunately, the smaller competitors have been absorbed by the bigger telecoms. It’s similar to the banking sector where the big banks started acquiring the online only banks where you could get a higher interest rate.

Telecom Selection Criteria

How and why do you pick one provider over another is a big question. First of all, while your experience with one provider can influence your decision, the big telecoms all have the same love / hate relationship with customers. I have personally been with all three and I would say the promotion of the day has a big influence on customers – and they know that. They have all the data to assess their customer retention.

Aside from attempting to assess any competitive advantage one company has over the others, below are the questions I ask myself.

  • What is the ability for the company to provide attractive bundles to consumers? Can the user have more than one service with the provider? How many consumers does it reach? Mobile can reach all provinces but not the bundles.
  • What’s the secondary business for the telecom? Is it owning a sports team? Is it owning TV channels? Is it digital streaming? Is it another business?

Once the business is identified, you can assess the dividend yield & dividend growth you might want as well as the entry point you would like. 

TickerKeyTickerCompanySectorIndustryScoreQuoteMarket CapP/EFPEEPSYield RawYieldPayoutRatioPaymentsDividendChowderGrowthRatingIncomeRatingTollboothAmbassadorAchieverAristocratKingCountryGraph
TSE:BCEBCEBCECommunication ServicesTelecommunication Services0.6855.5037.9220.4220.422.720.06006.001.224343.330.111168Tollbooth - RegulatedNOYESYESNOCanada1
TSE:TTTelusCommunication ServicesTelecommunication Services0.6923.5222.9220.1020.101.170.04954.950.995741.170.119377Tollbooth - RegulatedNOYESYESNOCanada1
TSE:RCI.BRCI.BRogersCommunication ServicesTelecommunication Services0.4751.8320.0815.6115.613.320.03863.860.602442.000.052325Tollbooth - RegulatedNONONONOCanada1
TSE:SJR.BSJR.BShaw CommunicationsCommunication ServicesTelecommunication Services0.4524.329.4218.8118.811.290.04874.870.9186121.190.048724Tollbooth - RegulatedNONONONOCanada1
TSE:QBR.BQBR.BQuebecor Inc.Communication ServicesTelecommunication Services0.5433.178.3014.3214.322.320.02412.410.344840.800.252164Tollbooth - RegulatedNONOYESNOCanada1
TSE:CCACCACogeco Cable IncCommunication ServicesTelecommunication Services0.65111.695.3614.7214.727.590.02082.080.305742.320.124977Tollbooth - RegulatedYESYESYESNOCanada1
TSE:CGOCGOCogecoCommunication ServicesTelecommunication Services0.6888.941.2811.1011.108.010.02142.140.237241.900.155277Tollbooth - RegulatedYESYESYESNOCanada1

Best Telecom Stocks

BCE has the strongest infrastructure in Canada but Telus is venturing in the health business. If you want a different play on data, think of Brookfield Infrastructure as it is investing in data infrastructure along with being a utility. Below are your top 3 telecom stocks and biggest players in the wireless segment which generates the majority of their profits. Rogers has decided to not always increase its dividend and re-invest in the company. That can lead to higher stock performance if their investment pays out.

1. BCE

TSE:BCEBell Canada Enterprises is Canada’s largest telecommunications company. It provides an extensive range of products and solutions for its customers’ communication needs. The company owns Canada’s largest network of data centers, retail outlets, as well as Bell LTE, Canada’s national network. BCE is a leading residential communications provider offering fiber-based Fibe TV and Fibe Internet, Connected Home services and home phones in seven provinces. It also provides national wireless services, and a wide range of business communications services including data hosting and cloud computing across the country. Bell Canada caters to a diversified customer base which includes retail consumers, businesses and government customers. Moreover, its multimedia company, Bell Media is Canada's premier media company hosting the No.1 sports channel TSN. The company operates through Bell Wireline (52% of Q4’18 revenues), Bell Wireless (35%) and Bell Media (13%) segments. By revenues, wireline is its largest segment, with revenues comprising of data, voice and other services (90% of wireline revenues) and products (10%).

Investment Data

2. Telus

TSE:TTELUS Corp. is a leading telecom company in Canada. It is the second largest in Canada and provides a wide range of communications products and services such as data, IP, voice, television, entertainment, and video. It is also Canada's largest healthcare IT provider. TELUS has a strong presence in the personal, business and healthcare segments which provides a diversified stream of income. Wireless is the larger segment accounting for 57% of total revenue while the wireline segment constitutes the remaining 43%.

The company has industry leading wireless churn rates of below 1%. TELUS serves more than 13 million customer connections, including 8.9 million wireless subscribers, 1.7 million Internet subscribers, 1.3 million residential network access lines and 1.1 million TELUS TV customers. TELUS Corporation is a leading network provider catering to 99% of Canadians. The company generates recurring monthly fees from its subscribers, which are growing in number, and is well positioned to benefit from a growing appetite for data.

Investment Data

3. Rogers Communications

RCI.B - RogersRogers Communications is a large and diversified Canadian communications and media company and the largest wireless and cable TV provider in Canada. Rogers Communication has 1.7 million television, 2.4 million internet, and 1.1 million phone subscribers. It is known for delivering the fastest internet speed to its customers and has the lowest churn rate amongst postpaid customers. Almost all of Rogers Communications’ business is in Canada. The company has diversified revenue streams comprising of wireless (60% of total revenue), cable (26%), and media (14%). The company has a portfolio of media assets that reach Canadians from coast to coast. Sportsnet which is the number one sports media brand in Canada is one of Rogers’ TV networks. The company’s extensive and scalable network infrastructure consisting of hybrid fibre-coax cable network is its strong competitive advantage. Rogers’ multi-band LTE wireless network covers 99% of the Canadian population and its prime 700 MHz spectrum covers 92% of Canada’s population.

Investment Data

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.
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