Canada’s telecom heavyweights, BCE (TSX:BCE) inventory and Rogers Communications (TSX:RCI.B) inventory, are locked in a high-stakes battle for investor {dollars} this 12 months. With each shares bruised by a difficult five-year stretch—every delivering almost equivalent unfavorable 29% whole returns—the query isn’t nearly previous ache however future potential beneficial properties. As 2025 unfolds, their methods and monetary well being paint diverging photos. Let’s dig in.
BCE Whole Return Value knowledge by YCharts
Dividend drama vs progress gambits
BCE’s eye-popping 12.4% dividend yield in the present day is a siren name for passive-income seekers. However there’s a catch: the payout has persistently outstripped free money circulation (FCF), elevating pink flags. Administration admits the payout ratio is “elevated” and tied to regulatory and financial situations, leaving room for potential cuts if headwinds worsen.
Rogers Communications inventory, in the meantime, gives a extra modest 5.2% yield however higher FCF self-discipline. Its annual dividends have stayed comfortably beneath free money circulation per share, signalling a safer payout. Rogers can be leaning into progress, including 623,000 wi-fi and web subscribers in 2024—essentially the most subscriber additions in Canada—and pushing forward with its Shaw integration. A $7 billion structured fairness deal for wi-fi infrastructure and the pending $4.7 billion deal to amass BCE’s stake in Maple Leaf Sports activities & Leisure (MLSE) to construct a majority stake (75%) spotlight Rogers’s urge for food for scale and content material synergies.
Regulation roulette vs community dominance
BCE’s aggressive fibre community build-out ambitions hit a wall in 2024. A CRTC ruling forces BCE to open its expansive fibre networks to wholesale consumers, slashing projected margins. The corporate responded by chopping its fibre construct targets and redirecting capital to Ziply Fiber within the U.S.—a $4 billion wager on American broadband progress. Whereas this diversifies BCE’s footprint, it underscores the fragility of its Canadian progress engine.
Rogers, in distinction, is doubling down on community supremacy. It claims to have Canada’s “most dependable” 5G and web networks, with DOCSIS 4.0 trials delivering blazing 4.0Gbps (gigabits per second) speeds. Publish-Shaw, Rogers dominates western Canada, capturing 30% of 2024’s web subscriber progress. Its wi-fi margins hit an industry-leading 66% within the fourth quarter (This autumn), whereas steady common income per consumer (ARPU) (at $58) and bettering churn (1.53%) counsel pricing energy even in a saturated and price-competitive market.
BCE inventory vs Rogers inventory: Debt dilemmas
BCE’s internet debt sits at 3.8 occasions EBITDA (earnings earlier than curiosity and taxes, depreciation, and amortization), with plans to promote $7 billion in non-core belongings (together with MLSE and Northwestel) to scale back leverage. Nonetheless, its U.S. fibre growth and dividend commitments preserve the stability sheet tight for 2025 and past.
Rogers faces steeper challenges, with debt at 4.5 occasions EBITDA. The $7 billion infrastructure fairness deal and MLSE funding stay essential to hitting its 2026 leverage goal of three.5. Whereas Rogers’s free money circulation jumped 26% in 2024, execution dangers loom.
The decision: Security first with Rogers inventory or swing for the fences with BCE inventory?
BCE inventory fits passive-income hunters keen to gamble on dividend sustainability. Its fibre spine and U.S. growth provide long-term potential, however regulatory dangers and payout considerations demand warning.
Rogers is a progress play. Shaw’s integration, wi-fi management, and sports activities/media synergies place it to outpace friends—if it navigates debt and delivers on $1.1 billion in value financial savings.
In the long run, BCE inventory is a defensive dividend inventory to carry in turbulent occasions, whereas Rogers inventory rewards persistence with upside. You could possibly select your fighter—or diversify and hedge with each telecom shares.
