BCE (TSX:BCE)(NYSE:BCE) remains one of the most trusted options on the market for investors because of the perception of safety by investing in BCE as well as the fact that the company has been paying a handsome dividend to shareholders for well over a century. But are these points alone worthy of an investment?
Let’s take a moment to mention why BCE is still a good investment in the current market and whether that safe investment perception can actually make you rich.
Is BCE a safe investment? Safe could be a bit of misnomer; no investment is truly safe, as there are always risks associated with investing, so a better point to describe BCE might be as a stable investment option, which comes as a result of the growing need in our modern society for the subscription services that BCE offers.
Wireless service, in particular, has exploded in popularity in recent years, going from being solely an additional contact method for friends and family to reach us to become a digital store for all information pertaining to our daily lives. Not only are the uses for our devices nearly endless, but but we are also constantly on them, consuming our monthly data allowance to the joy of BCE. This point alone is a revenue generator for BCE and other telecoms, as with each passing month more advanced devices are released that can do more, which pushes developers to build better applications and ultimately forces us to consume more data.
Don’t believe me? Next time you’re commuting, take a glance up from your own device and look around — chances are nearly everyone is staring down at their device. The growing reliance on mobile device connections is one of several moats surrounding BCE. In terms of subscribers, in the most recent quarter, the company saw a record number of 177,834 new subscribers added, bringing the total number of wireless subscribers under the BCE umbrella to 9.48 million, a 5.3% improvement over the same quarter last year.
Beyond BCE’s core subscription services, the company also commands an impressive media empire that includes radio and TV stations around the country as well a stake in professional sports teams. Notably, among the holdings in that media empire are both the most-watched TV and sports networks in the country, while BCE’s radio empire draws in an audience of 17 million listeners. From a results standpoint, BCE’s media segment realized a 1.1% uptick in revenue over the same period last year to $731 million.
BCE is a dividend aristocrat One of the primary reasons that investors flock to BCE is because of the company’s impressive dividend. As an aristocrat, BCE has an established history of providing annual upticks to the quarterly payout, which currently provides an appetizing 5.47% yield.
Adding to this allure is the fact that BCE’s current yield not only far exceeds that of its telecom peers on the market, but that BCE has been rewarding shareholders with a solid dividend payout for well over a century.
Critics of BCE and of telecoms in general often point to the claim that those generous dividends come at the cost of limited growth prospects. This claim couldn’t be further from the truth, as BCE has not only provided growth to investors, but has also expanded on several fronts throughout the past few years, with the MTS acquisition, AlarmForce deal and just this month the acquisition of online video service provider Freecaster.
In my opinion, those seeking an investment that can offer both long-term growth and both a very generous and growing dividend income will benefit from investing in BCE. Buy it and forget about it for a decade.
Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned.