After the Bank of Canada cut interest rates by a jumbo size of 50 basis points, telecom stocks dropped. BCE (BCE) slumping is especially concerning. The stock trades ex-dividend today yet it fell throughout last week.
BCE stock now offers a 10.90% dividend yield. Markets are not expecting just a suspension. It is pricing a dividend cut in 2025.
Rogers Communications (RCI) lost 4.7% last week. It has excellent value, profitability, and analyst earnings per share revisions. It bought BCE’s Maple Leaf Sports & Entertainment (MLSE) for C$4.7 billion. Rogers said that the big purchase would not hurt its debt leverage. It will get financing that includes private investors.
Telus (TU) fell the most last week, dropping by 7.93%. The stock has good value, profitability, and EPS revisions. However, Telus does not have any media holdings. It depends mainly on the Western Canadian markets for its telecom business.
Canadian Dollar Decline
The three telcos likely lost foreign investors, who sold off the Canadian dollar to avoid more losses. The rate cut decreases the attractiveness of the dollar. Although it stimulates the housing market, the impending 25% U.S. tariffs will hurt Canada’s economy. The B of C would need to cut rates by even more. This hurts the value of telecom stocks and the currency.
