Kalkine Media - In the past year, slow economic growth and high interest rates in Canada have dampened consumer spending, impacting the communications sector on the TSX. This has led to underperformance compared to the broader market. However, amidst this weakness, some TSX communication stocks stand out as attractive investments due to their resilience and long-term growth potential.
One such stock is BCE (TSX:BCE) (TSX: BCE), a leading player in the Canadian communication industry. Despite a market cap of $40.9 billion and trading at $44.84 per share, BCE has seen a 29% decline in its value over the past year, rendering it undervalued. The company's strong cash flows allow it to offer an impressive 8.9% annualized dividend yield, making it appealing to income investors.
Despite challenges such as sluggish household spending, BCE managed to achieve a 2.1% year-over-year growth in total revenue to $24.7 billion. Additionally, its adjusted EBITDA rose by over 2% to $10.4 billion in 2023, with a stable EBITDA margin of 42.2%. BCE plans to enhance profitability by reducing capital expenditure and implementing cost-saving measures, thereby sustaining its dividend payouts over the long term.
Another promising communication stock on the TSX is Telus (TSX:T) (TSX: T). With a market cap of $32.7 billion and trading at $22.13 per share, Telus has seen a 21.6% decline in its value over the past year. Despite this, it offers an attractive 6.8% annualized dividend yield. Telus demonstrated resilience by adding 404,000 new mobile and fixed customers, reflecting a strong 34% year-over-year growth.
Telus's quarterly revenue increased by 2.8% year-over-year to $5.2 billion, with adjusted quarterly EBITDA rising by 9.4% to $1.8 billion. In 2024, Telus aims for 2% to 4% operating revenue growth in the Telus Technology Solutions segment and a 5.5% to 7.5% year-over-year growth in adjusted EBITDA. These targets indicate Telus's confidence in achieving strong business growth despite the challenging macroeconomic environment.