1 Canadian Dividend Underdog That Could Disrupt its Peers

Quebecor (TSX:QBR.B) is a dividend underdog that could really accelerate its growth, as it looks to disrupt its Big Three telecom peers.

| More on:
edit Businessman using calculator next to laptop

Image source: Getty Images.

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn moresdf

As valuations continue to swell, it may be a good idea to rotate back into the tried and tested value names that are likelier to hold their own should the broader markets be dealt with negative surprises.

Numerous pundits think rates are headed higher — perhaps much higher over the medium term. Such a raising of rates eats into the future profits of firms, especially today’s unprofitable growth firms, whose shares lack a price-to-earnings (P/E) multiple.

Yes, the price of admission into growth is high here. But that doesn’t mean you need to give in and adopt the “growth at any price” mindset that many beginner investors may be doing at this juncture. So, if you’re one of many new investors who may have neglected value in favour of a growth-focused approach, you’re not alone. There are ways to bring your portfolio back into balance, so you’re not in a spot to take double damage come the next growth-oriented selloff.

Value stocks that could hold up in the face of a selloff

Consider Quebecor (TSX:QBR.B), a rock-solid TSX stock that is cheap enough to help you better navigate the next correction, whenever it may strike.

Nobody knows if the pain is coming later on this year, next year, or in a few years down the road. We may very well be overdue for a correction, but there have been past periods where the markets have gone without a correction for ridiculously long periods of time. Moreover, just because a correction is overdue doesn’t mean it’s bound to happen anytime soon or that a market that’s correction-free for over a year will experience a more severe drop.

In any case, you need to be positioned to make it through the next correction. And the following two names can help alleviate the pain that comes with those inevitable (and sometimes sudden) declines.

Quebecor: A new underdog in the telecom space

Quebecor is one of Canada’s least-known telecoms. The Quebec-based play doesn’t get as much limelight as its Big Three peers. And as a result, I think the stock is significantly discounted relative to its bigger brothers in the space.

For years, the Big Three have dominated the scene, providing Canadian investors with income and steady appreciation. Quebecor has typically commanded a more modest yield alongside muted top-line growth. The company has stayed mainly within the Quebec market over the years, after all. And for those seeking next-level growth, the Big Three look more enticing.

Recently, Quebecor announced intentions to expand Videotron into promising new markets like Alberta and BC. Undoubtedly, Quebecor could grow to become the fourth primary wireless carrier now that Shaw Communications is joining forces with Rogers Communications.

Bottom line

The 3.5% yield leaves a lot to be desired. Quebecor’s foray into non-Francophone markets could pay huge dividends. But it won’t come without its fair share of risks. In any case, I’m a huge fan of management’s capabilities and think they can pull it off. At just 13.2 times earnings, Quebecor is arguably the cheapest telecom play out there.

The way I see it, Quebecor is an underdog that could evolve to become the fourth major telecom player that we Canadians have all been waiting for.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV.

More on Dividend Stocks

growing plant shoots on stacked coins
Dividend Stocks

5 Dividend Stocks to Buy With Yields Upwards of 5%

These five companies all earn tonnes of cash flow, making them some of the best long-term dividend stocks you can…

Read more »

funds, money, nest egg
Dividend Stocks

TFSA Investors: 3 Stocks to Start Building an Influx of Passive Income

A TFSA is the ideal registered account for passive income, as it doesn't weigh down your tax bill, and any…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

3 of the Safest Dividend Stocks in Canada

Royal Bank of Canada stock is one of the safest TSX dividend stocks to buy. So is CT REIT and…

Read more »

Growing plant shoots on coins
Dividend Stocks

1 of the Top Canadian Growth Stocks to Buy in February 2023

Many top Canadian growth stocks represent strong underlying businesses, healthy financials, and organic growth opportunities.

Read more »

stock research, analyze data
Dividend Stocks

Wherever the Market Goes, I’m Buying These 3 TSX Stocks

Here are three TSX stocks that could outperform irrespective of the market direction.

Read more »

woman data analyze
Dividend Stocks

1 Oversold Dividend Stock (Yielding 6.5%) to Buy This Month

Here's why SmartCentres REIT (TSX:SRU.UN) is one top dividend stock that long-term investors should consider in this current market.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

Better TFSA Buy: Enbridge Stock or Bank of Nova Scotia

Enbridge and Bank of Nova Scotia offer high yields for TFSA investors seeking passive income. Is one stock now undervalued?

Read more »

Golden crown on a red velvet background
Dividend Stocks

2 Top Stocks Just Became Canadian Dividend Aristocrats

These two top Canadian Dividend Aristocrats stocks are reliable companies with impressive long-term growth potential.

Read more »