The telecom sector in Canada went through a harsh bear market in 2024. Many of the giants fell hard, and the slump even impacted the dividend streak of one of the giants and a Dividend Aristocrat.

The chances of a solid recovery in 2025, especially in the absence of supportive regulatory reforms, are too optimistic. But if you still want to buy from the sector or if you want to take advantage of the discounts as we enter the new year, two telecom stocks may fit the bill.

A small North American telecom company

Cogeco (TSX:CGO) is relatively small compared to the three telecom giants dominating the Canadian market. But it's still a decent enough pick. It has a diverse business model, and unlike other telecom giants that primarily operate in Canada, this company also has a significant business in the U.S.

This may have been one of the reasons why this stock was already on its way up when other telecom stocks were still slumping.

The stock has risen by about 29% since the middle of the year. Despite this bullish phase, the price-to-earnings ratio remains very attractive at seven. However, the most compelling reason to buy the company is its dividends and the current generous 6% yield.

A very healthy payout ratio backs the dividends, and the company is also growing its payouts at a decent pace.

A Canadian telecom giant

Telus (TSX:T) is one of the three telecom giants in Canada and one of the most prominent 5G stocks. And like the other giants, the stock is going through a brutal correction phase right now, trading at a 39% discount from its five-year peak.

It got on a recovery trajectory a few months ago but quickly started falling again. A few days ago, the stock's downward trajectory took a sharp turn, going down over 7% in less than a week.

One natural benefit of this slump is that the dividend yield has gotten relatively high. However, investors also have reason to be suspicious about the 7.7% yield the stock is offering right now, especially considering the payout ratio of 242%.

However, unlike other giants, Telus hasn't made any declarations about stopping its dividend growth. This gives hope that the stock may retain its aristocratic status and continue raising dividends despite the market headwinds.

Telus boasted a decent growth in total users. It also has significant investments in a couple of other industries (telehealth and smart homes), and a significant increase in those segments can partially offset the problems it's facing in conventional telecom services.

Foolish takeaway

The two telecom stocks might be worth considering in 2025. Something significantly positive, like regulatory relaxation or a higher influx of new customers in conventional and other business segments, can also trigger a recovery. At their current discounted state, a full recovery can lead to significant returns.