Monday, April 18, 2011


I first bought BCE (TSX-BCE) in 1982. I have only tracked this stock on Quicken from 1987 and since then I have had a return of 12.7% per year in total returns. This total return figure includes Nortel and Bell Aliant, both of which BCE has spin off over the years. It is hard to value the return from this stock. Not only has BCE spin-off other stocks, but they tended to do this at high prices.

I was lucky to sell half of my Nortel in 2000 when it was still worth something. And, looking Bell Aliant alone, I have lost 4.8% per year between the time of the spin-off in 2006 and when I sold the stock in 2008. I did not get much in the spin off and it was not a stock I wanted to hold. According to Quicken, I have made a total return of 8.6% per year over the past 5 years. This includes the Bell Aliant spin-off.

I guess the first thing to talk about is dividends. The yield on this stock is quite good at 5.6%. The growth in dividends has been over the past 5 and 10 years at 5.6% and 3.4% per year, respectively. However, BCE has been inconsistent in dividend increases. They have good increases when they do an increase, but there are lots of years with no increases, and some with decreases. The 10 year growth rate is not much better than the long term background inflation rate of 3%.

There has been limited growth in revenue over the past 5 and 10 years. Cash Flow growth is not much better. The growth in Earnings is better, with 5 and 10 year growth at 6.9% and 8.5% per year, respectively. Book Value growth over the past 5 and 10 years at 6.4% and 0% per year respectively is nothing to write home about.

When I look at the debt ratios, I find the Liquidity Ratio low at 0.60; however, it is usually low. The Asset/Liability Ratio is good 1.86. The Leverage Ratio at 2.72 and the Debt/Equity Ratio at 1.46 are pretty normal. There is nothing remarkable in these debt ratios for this company.

Looking at the Return on Equity, I find that the ROE for the financial year ending in 2010 at 15%. The 5 year median ROE is also 15%. Both these ROEs are good and the ROE for 2010 is also normal for this company.

I sometimes wonder if I should not sell the rest of my BCE shares. They are just under 1% of my portfolio and I have not been interested, when I have money to invest, in buying anymore. Problem, of course, is that my ACB is very low on this stock.

BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is here BCE. See my spreadsheet at bce.htm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.

1 comment:

  1. I wouldn't sell your BCE, buy more since the yield is, I think, too good not too :)

    "Ma Bell" isn't going anywhere anytime soon.