Rogers Communications Inc. (TSX: RCI/B, NYSE: RCI) is one of the Canadian telecom sector’s Big Three, competing nationally as part of an oligopoly with Dividend Champions BCE Inc. (TSX: BCE, NYSE: BCE)and Telus Corp. (TSX: T, NYSE: TU). Although Rogers is not a holding in the Dividend Champions Portfolio, it has been on our Watchlist for a long time.

Recent results from the company have been encouraging. First-quarter adjusted earnings per share jumped 36% year over year, though the dividend remained unchanged at C$0.48 per share.

Rogers generates most of its revenue and profit from its wireless division. The segment continues to be the company’s best-performing business, with revenue and operating profit up 4% and 7%, respectively, during the first quarter.

The subscriber base has expanded, with 453,000 (+5%) additions over the past year, while the longer-term trend is also distinctly positive. Average revenue per user rose 2.4%, to $59.96, as subscribers increasingly use their mobile phones for data-intensive activities such as streaming videos, gaming, and general web-browsing.

The cable division reported flat revenue and operating profit, though the Internet division fared quite well, as the subscriber base expanded and usage increased. However, the division was dragged down by the loss of TV subscribers and discounting on landline phone services.

Our main concern for Rogers remains leverage. The telecom giant is shouldering a significant debt burden, which now stands at C$17 billion—about 70% higher than five years ago.

Although Rogers still enjoys an investment-grade credit rating, the business will struggle in a rising interest-rate environment.

The stock currently yields 3.1%, but the dividend has remained unchanged for the past two years, with little prospect that it will be increased anytime soon.

Despite sporting the lowest yield of the Big Three, Rogers’ stock has performed quite well year to date, and its valuation is now on par with BCE and Telus.

Given Rogers’ high debt and the fact that its valuation gap has now closed, we do not believe this is an opportune time to add Rogers to the Dividend Champions Portfolio.