The communication sector is a stable sector akin to the railway industry where the companies operate in an oligopoly. While newcomers are allowed in by leveraging the infrastructure of the big telecoms, they historically have provided a sub-standard service but a lower price. Over the years, unfortunately, the smaller competitors have been absorbed by the bigger telecoms. It’s similar to the banking sector where the big banks started acquiring the online only banks where you could get a higher interest rate.
Telecom Selection Criteria
How and why do you pick one provider over another is a big question. First of all, while your experience with one provider can influence your decision, the big telecoms all have the same love / hate relationship with customers. I have personally been with all three and I would say the promotion of the day has a big influence on customers – and they know that. They have all the data to assess their customer retention.
Aside from attempting to assess any competitive advantage one company has over the others, below are the questions I ask myself.
- What is the ability for the company to provide attractive bundles to consumers? Can the user have more than one service with the provider? How many consumers does it reach? Mobile can reach all provinces but not the bundles.
- What’s the secondary business for the telecom? Is it owning a sports team? Is it owning TV channels? Is it digital streaming? Is it another business?
Once the business is identified, you can assess the dividend yield & dividend growth you might want as well as the entry point you would like.
Best Telecom Stocks
BCE has the strongest infrastructure in Canada but Telus is venturing in the health business. If you want a different play on data, think of Brookfield Infrastructure as it is investing in data infrastructure along with being a utility. Below are your top 3 telecom stocks and biggest players in the wireless segment which generates the majority of their profits. Rogers has decided to not always increase its dividend and re-invest in the company. That can lead to higher stock performance if their investment pays out.
1. Telus
The company has industry leading wireless churn rates of below 1%. TELUS serves more than 13 million customer connections, including 8.9 million wireless subscribers, 1.7 million Internet subscribers, 1.3 million residential network access lines and 1.1 million TELUS TV customers. TELUS Corporation is a leading network provider catering to 99% of Canadians. The company generates recurring monthly fees from its subscribers, which are growing in number, and is well positioned to benefit from a growing appetite for data.
Investment Data
2. BCE
3. Shaw Communications
Build Your OWN Top List
My portfolio is generating over 12% annual returns since 2009. It’s not from the beginning of the year or from 2019, it’s from 2009 !!! That’s a consistent return which means using the rule of 72, I double my portfolio every 6 years. My approach is simple but you need key data that I have cultivated with the Dividend Snapshot Screeners. No other investment services provide you with easy to understand data but also actionable data. No hidden magic. In fact, I have tried all of the investment services for dividend investors like a crash test dummy of investment services. Just ask me, and you’ll learn why there was nothing I could use out there and build the Dividend Snapshot Screeners.
DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.
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