The ‘Internet of Things’ is Coming, and You’ll Want to Buy This Telecom Stock Beforehand

Wireless technology

The Internet of Things (IoT) is exploding. With technological advancements integrating into and improving every aspect of our lives, devices connected to the internet will become increasingly common. As this sub-segment in the tech sector becomes increasingly popular, publicly traded businesses involved with it stand to benefit greatly.

For someone invested in these businesses, the value of their investments can also grow significantly. Gartner forecasts that the IoT market will grow at a compound annual growth rate (CAGR) of 7% between 2020 and 2030, effectively increasing the number of IoT-installed devices to around 3.2 billion worldwide.

Naturally, investing in companies making these devices can be a great way to benefit from the industry’s rise. That said, you can also benefit from investing in another industry that is paving the way for growing IoT adoption: telecommunications.

Telecoms and IoT

IoT is the connection of consumers with devices through sensors over a network. For successful widespread IoT adoption and to unlock the true potential of the technology, there needs to be strong internet connectivity empowering it. This is where telecom operators can be critical to the industry’s success.

For strong connectivity between devices, wireless internet technology must be quick, powerful, and have the capacity to share enormous amounts of data between devices successfully. Thanks to the advent of 5G technology, this is becoming increasingly likely.

Top 5G stock in Canada

Canada’s telecom industry has many players, but it is dominated by three major players: BCE Inc. (TSX:BCE), Telus, and Rogers Communications. Of the three, BCE is the industry-leading telecom provider in the country. While traditionally a no-brainer pick, BCE stock has had its fair share of trouble performing on the stock market lately.

Weighed down by the series of sharp interest rate hikes, the slowdown in economic activity has led to a steady decline in its share prices. With businesses across all industries feeling the effects, it is unsurprising to see the share prices of BCE stock drop. However, the eventual cooling off of the economy will lead to lower interest rates, in turn helping BCE stock recover to better levels.

As of this writing, BCE stock trades for $51.22 per share. At these levels, it pays its shareholders their payouts at an unusually high 7.56% dividend yield. While such high-yielding dividends are alarming in normal circumstances, BCE stock is arguably oversold.

The company’s capital program, which saw it invest in various projects, including expanding its 5G network and infrastructure, should drive future revenue growth and help it maintain its competitive position in the Canadian telecom industry.

Foolish takeaway

Besides offering immense growth potential through capital gains, BCE stock is a reliable dividend stock. Over the last 15 years, BCE stock has increased its dividends by at least 5% annually. While investors might not see similar dividend hikes in the next couple of years, you can lock in high-yielding returns by investing in its shares at current levels.

The post The ‘Internet of Things’ is Coming, and You’ll Want to Buy This Telecom Stock Beforehand appeared first on The Motley Fool Canada.

Should You Invest $1,000 In BCE?

Before you consider BCE, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in October 2023… and BCE wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 25 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 10/10/23

setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.