These three Canadian telecom stocks with high dividend yields could be attractive for income investors.
Collectively known as “Robellus,” Rogers Communications (RCI), BCE or Bell (BCE), and Telus (TU) are the three largest companies in Canada’s mobile carrier market. Despite generating respectable profits and revenue, all three are at yearly lows. It might be time for investors to take a serious look at these high dividend yield firms.
First it's useful to note that Rogers and Telus are at yearly lows in US currency (US$). Thanks to a drop in the Canadian dollar (C$), the share price of these firms has dropped in recent months. Rogers Communications offers an annual dividend of US$1.51 per share, a 4.44 percent yield. In the fourth quarter, Rogers earned C$0.69 per share on revenue of C$3.36 billion.
Rogers’ stock is not without risk. The firm has invested in content, announcing a 12-year, C$5.23 billion deal to broadcast NHL games in 2013. The move has neither helped nor hurt profits so far. In the fourth quarter, Rogers boosted its consolidated adjusted operating profit margin from 36.0 to 36.6 percent. Wireless profit margin was 42.6 percent while cable was 48.7 percent.
Telus, which is a pure play telecoms firm, demonstrated a record-low postpaid wireless churn rate in its fourth quarter, at just 0.94 percent (download pdf). This measure refers to the portion of customers that leave the provider for whatever reason. Revenue and earnings were up, while free cash flow jumped by 148 percent to C$337 million.
Telus pays an annual dividend of US$1.27 per share, yielding 3.83 percent.
BCE's share prices peaked at US$48.27 this year, and the stock offers an annual dividend of US$2.04 per share. The yield is 4.79 percent. In the fourth quarter, revenue grew 2.7 percent from last year to C$5.53 billion, while earnings were up 2.9 percent to C$0.72 per share.
BCE is not without risk, either. Its content unit, Bell Media, is facing challenges in generating profitability. Last quarter, EBITDA (earnings before interest, taxes, depreciation and amortization) from the division dropped 16.5 percent. Still, Bell’s other main businesses, such as high-speed internet and wireless, increased by a healthy amount. Wireless revenue grew 9.6 percent while the high-speed internet customer count grew 4.7 percent to 2.29 million customers.
Interest rates are at all-time lows, which may make buying low volatility telecom firms in Canada an attractive proposition.
Click on the interactive chart to view data over time.
All amounts in US$:
1. BCE Inc. (BCE, Earnings, Analysts, Financials): Provides wireline voice and wireless communications services, Internet access, data services, and video services to residential, business, and wholesale customers in Canada. Market cap at $35.77B, most recent closing price at $42.60.
BCE's annual dividend is $2.04 per share, a 4.79 percent yield.
Rogers' annual dividend is $1.51 per share, a 4.44 percent yield.
Telus' annual dividend is $1.27 per share, a 3.83 percent yield.
(List compiled by Chris Lau. Monthly returns data soured from Zacks Investment Research. Dividends, yields and all other data sourced from FINVIZ.)
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- TELUS Corporation (TU, Chart, Download SEC Filings)
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