Market leadership is a big plus

Article Excerpt

A key factor in determining a company’s Dividend Sustainability Rating is the position it holds in its industry. The market leaders of any industry are strongly placed to fend off new entrants and expand their earnings. That enhances their ability to raise their dividends. Market leadership could also be thought of as a “moat,” or a distinct and long-lasting competitive advantage. BCE and Telus are good examples. In the past few years, both have invested heavily in high-speed fibre-optic wireless and Internet networks. Both also continue to move ahead with next-generation 5G wireless technology; it’s about 20 times faster than current speeds. Moreover, both BCE and Telus benefit from the continuous, habitual use of their products. That’s especially so when they bundle local, long distance and wireless phone, TV service and Internet access into one package. This makes it harder for customers to change providers. Those factors make these utilities less sensitive to the ups and downs of the economic cycle than, say, Resources or Manufacturing firms. firms…

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