A well-balanced portfolio should contain investments from several market segments. Each portfolio should also contain a healthy mix of growth and income investments. Finding the perfect blend takes time and patience. Fortunately, there are stocks that can offer both growth and income potential. Such a stock is BCE (TSX: BCE) (NYSE: BCE). Here’s why you might want to buy BCE today.
Defensive actions are underestimated
As one of the largest telecommunications companies in Canada, BCE is known to many investors primarily as a defensive stock. There is a good reason for this point of view. Telecommunications provide a necessary service to massive subscriber bases that generate recurring and stable sources of income. In the case of BCE, these subscriber revenues are also augmented by a massive media segment.
In the year since the start of the COVID-19 pandemic, this defensive appeal has only grown. There are now a growing number of full-time remote employees, and this trend will not stop with the pandemic. Employees have proven they can work productively remotely, while businesses can reduce office costs with a remote workforce.
For BCE, this means that telephone and Internet connections have assumed enormous importance. This trend is unlikely to slow down anytime soon, which reinforces the reason why investors should be looking to buy ECB today.
What about growth?
The growing need for a stable internet connection is just one area in which telecommunications such as BCE are experiencing immense growth. However, the main segment where this growth is coming from is the wireless segment.
Wireless connections have gained in importance in recent years. In just over a decade, wireless connections have grown from auxiliary communication devices to digital extensions of ourselves. Our smartphones (which aren’t really phones anymore) are now doing what dozens of stand-alone devices were once needed for.
This growing need also means a growing appetite for data, which BCE continues to provide and benefit from. As an example, in the last quarter BCE reported postpaid mobile phone net additions of 32,925.
Did anyone say come back?
Besides BCE’s defensive appeal, one of the main reasons investors continue to flock to BCE is the company’s exceptional dividend. BCE offers investors a quarterly dividend which currently equates to a palatable yield of 5.85%.
To put this juicy earning potential into context, a $ 30,000 investment in your TFSA that shouldn’t grow will net you $ 1,755 in the first year alone. If you are not yet ready to take advantage of that income, reinvesting those dividends will dramatically increase income over time.
For income investors, this might be reason enough to buy BCE today, but there is still more.
Speaking of bumps, it’s also worth noting that BCE has provided this handsome dividend to investors for over a century, making it one of the highest paying companies out there. BCE has also provided investors with annual or greater increases in this dividend for more than two decades.
Will you buy BCE today?
No investment is risk-free, but some stocks can offer stable growth for decades. BCE fits perfectly into this category. In my opinion, BCE should be an integral part of any well-diversified portfolio. Buy BCE today and hold it for the long term.
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Silly contributor Demetris Afxentiou has no position in any of the listed securities.