BCE (TSX:BCE) stock has been showing slight signs of bottoming out over the past few quarters. Aided by a decent round of quarterly earnings results and the hopes for lower (perhaps much lower) interest rates sitting right around the corner, BCE stock's latest run-off lows seem worth getting behind for passive income investors seeking to give themselves a bit of a raise. Indeed, the dividend continues to stand tall, even after bouncing more than 11% off those June 2024 depths.
At the time of writing, the telecom behemoth boasts a commanding 8.5% dividend yield. Sure, some may have concerns that the payout is getting slightly stretched.
However, if all goes well and management continues to improve upon efficiencies while the industry and macro environment improve, the dividend seems quite secure. But just because things have been looking up of late does not mean BCE stock won't make a return to the $42-43 per-share levels faced at the start of the summer season.
Forget BCE stock. It's not the only dividend champ in town
Despite the yield, which I believe many investors have been chasing lately, the stock looks quite richly valued with a price-to-earnings (P/E) multiple currently sitting just north of 22 times. That's not cheap, especially for a company that's faced such significant pressures over the past few years.
In any case, BCE stock stands out as a potential comeback play for those who are hungry for higher yields. However, as is often the case, chasing higher yields can be a risky proposition. In the case of BCE, I do think you can score better total returns (that's dividends plus capital gains) with some of the other dividend plays out there.
In this piece, we'll check in with one solid and much cheaper option for investors looking for some capital gains potential to go with their dividends.
Quebecor: A cheaper, growthier telecom with a nice yield of its own
Quebecor (TSX:QBR.B) is a Quebec-based telecom firm that can and probably will put up a good fight with Canada's so-called Big Three telecom companies. Indeed, Canadians (and the federal government) want the telecoms to lower their prices, given that Canadian wireless phone bills still seem to be on the high side, at least as far as the developed world is concerned. That's a problem that can be solved by greater competition.
Though Quebecor's entry into the national telecom scene does not guarantee better deals for Canadians, I do think that the odds favour Quebecor as it looks to disrupt the Big Three and turn it into the Big Four.
The stock is absurdly undervalued, at least in my opinion, at just 10.5 times trailing P/E, less than half the multiple commanded by BCE stock at current levels.
Further, the dividend yield, while also less than half the size of BCE's, is quite bountiful at 3.9%. Though seemingly small, I do think Quebecor's dividend payout will grow by a greater deal over the next three to five years. And with a better shot at breaking new highs, I'd not sleep on the name if you seek appreciation along with dividends for the long haul.
