BCE Inc.

Sound bite for Twitter and StockTwits is: Stock price relatively high. This stock has been moving up since the later part of 2008. It is not very expensive, but it seems to be above the relative median. See my spreadsheet on BCE Inc.

I own this stock of BCE Inc. (TSX-BCE, NYSE-BCE). This is one of first stocks I bought, which was in 1982. At that time is was called an orphan and widow stock. It is not easy to figure out what I have earned on this stock because it has spun off shares for Nortel and Bell Aliant. The annoying thing with their spin offs is you always end up with an odd number of shares.

This stock has had a fairly good record as a dividend growth stock. They have not always raised their dividends each year, but dividends have grown over time. The current dividend is at a good yield and the dividend increases are moderate. The current dividend yield is 4.61% and the 5 year dividend yield at 5.14%. The 5 and 10 year dividend growth is 8.2% and 6.9% per year.

For the stock I bought in 1982, which is 34 years ago, I am earning a dividend yield of 74%. I have been tracking this stock since 1987 in Quicken and that is some 28 years. I have been made a total return of 9.51% per year with 4.08% per year from capital gains and 5.43% per year from dividends. Note that I sold off my Nortel and Bell Aliant stock. I sold off half of my Nortel stock in 2000 and the remaining stock in 2006. I got a very good price for my shares in 2000, but not so much in 2006.

There are a couple of negative things that I would like to point out. The first one is that Book Value and Book Value per Share have been declining. BVPS is down by 4.76% and 0.67% per year over the past 5 and 10 years. This is something I do not like and find it is a negative.

The other thing is the low Liquidity Ratio. The Liquidity Ratio for 2015 is just 0.48. This is close to the 5 year median value of 0.58. If you add in cash flow after dividends, the ratio becomes 1.01. The 5 year median for this ratio is 1.10. I prefer the Liquidity Ratio to be 1.50 before you add in cash flow after dividends. A low Liquidity Ratio could mean that a company would be vulnerable in bad times.

Most growth, that is revenue, earnings and cash flow for this stock is low to moderate over the past 5 and 10 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 15.28, 16.76 and 18.25. This is higher than the corresponding 10 year P/E Ratios of 11.81, 12.92 and 14.25. The historical ratios are 11.07, 11.92 and 13.74. The current P/E Ratio is 17.41 based on a stock price of $59.19 and 2016 EPS estimate of $3.40. This current P/E Ratio is rather high and certainly above the median.

I get a Graham Price of $33.92. The 10 year low, median and high median Price/Graham Price Ratios are 1.10, 130 and 141. The current P/GP Ratio based on a stock price of $59.19 is 1.74. This stock price testing suggests that the stock price is high.

The 5 year median dividend yield is 5.14%. The current dividend yield is 4.61% based on dividends of $2.73 and a stock price of 59.19. The current dividend yield is some 10% above the 5 year median dividend yield. This suggests that the stock price is reasonable but above the median.

Note that the 10 years median dividend yield is 5.17%. The historical median dividend yield is 6.04%. However, I wonder how relevant past yields are because of this company purchasing and spinning off assets.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. Most of the recommendations are a Hold. The consensus recommendation would be a Hold. The 12 month consensus price is $57.87. This implies a total return of 2.38% with 4.61% from dividends and a capital loss of 2.23% based on a current price of $59.19. This company's price is above where analysts expected it to be.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see those reports here and here.

Andrew Walker of Motley Fool talks about why you should buy this stock. Thomas Dobrow of Financial Market News talks about Hedge Fund and Institutional buying of BCE. What analysts say about this stock on Stock Chase.

I recently wrote about AltaGas Ltd (TSX-ALA, OTC-ATGFF)... learn more. The next stock I will write about will be Sun Life Financial Inc. (TSX-SLF, NYSE-SLF)... learn more on Monday April 4, 2016 around 5 pm.

Also, on my book blog I have put a review of the book The Making of Asian America by Erika Lee. learn more...

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 Inc.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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