Kalkine Media explores 5 TSX Telecom stocks to watch this November

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 Kalkine Media explores 5 TSX Telecom stocks to watch this November
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  • BCE’s posted adjusted net earnings of C$ 801 million in Q3 2022.
  • In Q3 2022, Quebecor’s cash flow from operating activities was noted at C$ 467.8 million.
  • In Q4 FY2022, Cogeco’s revenue was noted at C$ 725.44 million.

The telecom industry in Canada has a huge customer base with little competition. It is characterized by monopolistic companies that lead to high retention rates as well. These companies may use different strategies to attract investors. But to select the stock of a particular company, make sure to consider all the factors that govern the sector. Along with dividends, check with company valuations, and past and present performance.

Currently, the S&P/TSX Capped Communication Services Index occupies 4.88 percent of the total Composite Index and witnessed a QTD (quarter-to-date) increase of 7.725 percent. The sector is diverse and includes companies offering a variety of services. Regardless of the diversity, conduct proper research before selecting the stocks. Have a long-term approach to overcome uncertainties and build a stabilized portfolio. Reposition your portfolio at regular intervals.

Here are five TSX telecom stocks and their financial performance in recent months:

  1. BCE Inc. (TSX: BCE)

BCE Inc. is a Canadian service provider that offers wireless, television, broadband, and landline services. The company is a wireless carrier that is also the ILEC (incumbent local exchange carrier-the legacy telephone provider). Additionally, the company is in the media segment as well which has digital media, radio, and television assets.  

In Q3 2022, BCE’s adjusted net earnings increased to C$ 801 million from C$ 748 million in Q3 2021. The operating revenues rose to C$ 6,024 million from C$ 5,836 million. The adjusted EBITDA grew to C$ 2,588 million from C$ 2,558 million. The adjusted EPS (earnings per share) also witnessed an increase and was reported at C$ 0.88 versus C$ 0.82. The cash flow from operating activities rose to C$ 1,996 million from C$ 1,774 million. With 5.883 per cent as dividend yield, BCE distributes dividend per share of C$ 0.92. The company posted a three-year dividend growth of 4.38.

  1. Quebecor Inc. (TSX: QBR.B)

Quebecor Inc. is engaged in providing telecom services including fixed line and mobile. The company operates in Quebec and serves approximately 60 per cent of the homes.  

In Q3 2022, Quebecor’s net income rose to C$ 180.8 million from C$ 179.2 million in Q3 2021. The revenue of the company decreased to C$ 1,143.7 million from C$ 1,148.2 million. The cash flow from operating activities was noted at C$ 467.8 million versus C$ 368.2 million. The adjusted EBITDA declined to C$ 518 million from C$ 520.3 million.

As on September 30, 2022, the total assets increase to C$ 10,845.3 million from C$ 10,763 million on December 31, 2021.

With a quarterly dividend of C$ 0.30 per share, the company reported a five-year dividend growth of 66.87 per cent.

The EPS of BCE, QBR.B, CCA, T, and RCI.B:

  1. Cogeco Communications Inc. (TSX: CCA)

Cogeco Communications Inc. is a Canadian communication corporation that provides telephone, video, and internet services with broadband fiber networks to the business and residential customers. The major segments of Cogeco are American and Canadian broadband services.

In Q4 of the fiscal year 2022, Cogeco’s revenue increased to C$ 725.44 million from C$ 632.68 million in Q4 2021. The adjusted EBITDA rose to C$ 347.1 million from C$ 290.57 million for the same period. The cash flow from operating activities also grew to C$ 319.13 million from C$ 281.54 million. The basic EPS of the company rose to C$ 2.29 from C$ 2.05. Cogeco pays a dividend of C$ 0.776 per share every quarter. The dividend growth for the past three years was noted at 9.5 per cent.

  1. TELUS Corporation (TSX: T)

TELUS Corporation is a service provider and occupies 30 per cent of the total market share. The company is engaged in providing landline phone, internet and television services in Alberta and British Columbia in Canada.

In Q3 2022, the operating revenue of TELUS Corporation increased to C$ 4,640 million from C$ 4,246 million in the year-ago quarter. The net income also rose to C$ 551 million from C$ 358 million for the same comparative period. The EBITDA rose to C$ 1,646 million from C$ 1,496 million. The free cash flow (FCF) soared to C$ 331 million from C$ 203 million. The dividend of the company was reported at C$ 0.351 per share with a dividend yield of C$ 4.823 per cent.

On October 27, 2022, TELUS International announced its definitive agreement to acquire WillowTree.

  1. Rogers Communications Inc. (TSX: RCI.B)

Rogers Communications Inc. is a wireless service provider and has subscribers equivalent to one third of the Canadian market.

In Q3 2022, the total revenue of Rogers Communications increased to C$ 3,743 million from C$ 3,666 million in the same quarter of the last year. The adjusted EBITDA declined to C$ 1,583 million from C$ 1,600 million. The assets of the company rose to C$ 54,783 million from C$ 41,963 million. On the other hand, the liabilities increased too C$ 45,121 million from C$ 31,431. The dividend yield of the company was noted at C$ 3.423 per share every quarter.

Bottom Line

There are several parameters that are considered by investors. Some may focus on the dividend while others may focus on the growth potential. Look at what is suitable for you. Not one shoe fits all and this is true for the stock market as well.

With recent developments in the telecommunication sector, it may be lucrative. But do not go with the flow. Instead, select stocks that align with your investment goals and match your portfolio needs. Also, moving on the path of diversification can further give clarity.

Please note, the above content constitutes a very preliminary observation based on the industry and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.


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