1 Magnificent TSX Dividend Stock Down 12% to Buy and Hold for Decades

When an otherwise impressive TSX dividend stock drops by double digits, long-term investors are faced with an opportunity to lock in a better position for long-term returns. While there’s always a reason why a stock drops, the long-term potential of that investment always needs to be weighed.

One segment where this view has become apparent this year is with Canada’s telecom stocks. More specifically, I’m referring to Rogers Communications (TSX:RCI.B), which is down 12% year to date.

As a telecom provider with essential subscription services, Rogers generates steady cash flow that supports long‑term dividend reliability even during market volatility.

Let’s try to answer the question of why Rogers is down and why your portfolio needs this TSX dividend stock.

Why is Rogers down this year?

To be fair, Rogers isn’t the only one of Canada’s big telecoms that is down this year. Rogers is, however, the one telecom stock that is down the most among its peers. That has caught the attention of long-term dividend investors.

The current pullback can be attributed to a variety of issues, rather than one single cause.

Telecoms like Rogers are capital-intensive businesses. They rely heavily on financing to fund network upgrades. When interest rates remain high, as they have in recent years, that results in extra pressure on a telecom’s finances. This drives the stock price down but also leads investors to rotate out of telecoms to higher-growth sectors.

For long-term investors considering this TSX dividend stock, this pullback should be viewed as an opportunity to buy a quality stock at a discounted rate. In fact, the Rogers business remains as resilient as ever.

Telecoms like Rogers generate a recurring revenue stream that is reliable and highly defensive. In recent years, some of Rogers’s subscriber-based segments have become more essential in nature. As a result, that’s broadened the defensive appeal of the stock as a whole.

Why this dip is an opportunity for investors

The dip in stock price has pushed Rogers’s quarterly dividend to an attractive 4.39% yield. That’s not the highest among the big telecoms, but it may be one of, if not the most sustainable among the lot right now.

This stability is especially important in a capital‑intensive sector like telecoms, where consistent cash generation is key to maintaining a sustainable dividend.

Where Rogers’s peers have endured dividend cuts and freezing annual increases over the past few years, Rogers has maintained its more conservative approach. In fact, unlike its peers, Rogers opted to suspend its annual increase years ago. Instead, Rogers opted to focus on investing in growth initiatives and paying down debt.

That’s not to say the current yield isn’t attractive. Investors who are able to invest $7,500 into Rogers will benefit from over a half-dozen shares generated each year from reinvestments alone.

Over a longer period, that’s a powerful compounding engine.

Beyond the dividend, Rogers benefits from a business model that’s built on a recurring revenue stream. Wireless plans, broadband subscriptions, and bundled subscription services create predictable income streams that help support both operations and shareholder returns. In addition, the company’s investments in 5G networks and infrastructure also position it for long‑term relevance as data usage continues to grow across the country.

This combination of a higher yield backed by defensive essential services makes Rogers a more appealing option for patient investors. For those building a portfolio designed to compound over decades, Rogers offers the kind of steady profile that fits well within a buy‑and‑hold strategy.

Will you buy this TSX dividend stock

Rogers sits at an interesting crossroads for investors. It trades at a 12% discount this year, offers a well-covered 4.39% dividend, and generates a recurring revenue stream from its essential subscription services.

For investors seeking a TSX dividend stock that can anchor a long‑term portfolio, Rogers checks many of the right boxes. More importantly, the current dip offers a chance to buy a stable company at attractive levels. With this, you also get a higher yield and long‑term growth potential.

For income‑focused investors, Rogers can serve as a defensive anchor that provides stability through different market cycles. In my opinion, Rogers is a great TSX dividend stock for buy‑and‑hold investors looking to add to any well-diversified portfolio.

The post 1 Magnificent TSX Dividend Stock Down 12% to Buy and Hold for Decades appeared first on The Motley Fool Canada.

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More reading

• Telus vs. Rogers: 1 Canadian Telecom Stock I’d Buy Today
• 3 TSX Dividend Stocks With Payout Ratios That Actually Hold Up to Scrutiny
• 2 TSX Stocks That Can Turn a $56,000 TFSA Into a Lasting Income Machine
• 3 TSX Dividend Stocks Yielding Up to 6% — and Each Can Back It Up

Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool recommends Rogers Communications. The Motley Fool has a disclosure policy.