BCE Inc.

Sound bite for Twitter and StockTwits is: Dividend growth Telecom. The stock price could currently be reasonable and below the median based on dividend yield testing. Other testing is really showing as relatively expensive. See my spreadsheet on BCE Inc.

I own this stock of BCE Inc. (TSX-BCE, NYSE-BCE). I bought this stock in 1982. At that time is was called an orphan and widow stock. In 2016 I sold Manitoba Telecom. To keep the same in Telecom category, I bought some more BCE with the proceeds. Since I bought this stock both Nortel and Bell Aliant were spin off. The problem with BCE's spinning off part of the company was that I ended up with an odd number of shares. It is annoying.

BCE is the first investment that I bought that I still own. I have actually done quite well. I have tracked this stock via Quicken since 1987 and have a total return of 12.84% per year with 5.33% from dividends and 7.51% from capital gains. This is over of period of 28 years. I have a spreadsheet on my early investments and from October 1982 until the end of 1987 when I started using quicken for the calculation, I made a total return of 11.46% per year on BCE.

Current this stock has a good dividend yield. The dividend yield is 4.87%. The 5 year median dividend yield is 4.89%, the 10 year dividend yield is 5.02% with an historical one of 4.54%. The dividend growth is low with the dividend growth for the past 5 and 10 years at 5.7% and 7.4% per year. The last dividend increase was at the beginning of this year and it was for 5.1%. They do not always increase the dividends. For example between 1997 and 2004, some 8 years, the dividend was flat.

The Dividend Payout Ratio for 2016 was 81% and over the past 5 years the dividend payout ratio was 80%. This is higher than the company says that it is aiming for as a while ago they said that they were aiming for a payout ratio between 65% and 75%.

Revenues have not been growing much. Also over the past 5 years outstanding shares have grown by 2.3%. So it is the Revenue per Share that is important. Over the past 5 and 10 years Revenues have grown by 2.2% per year. Over the past 5 Revenue per Share is flat and over the past 10 years Revenue per Share has grown by 1.3%.

Debt per se is not a problem. The Debt Ratio is 1.55 and the Debt/Market Cap Ratio is 0.33. However, the Liquidity Ratio is not great. This ratio for 2016 is 0.48 and it has a 5 year median of 0.50. If you add in cash flow after dividends it is 1.03. If you add back in the current portion of the long term debt the ratio is 0.93. If you add in the current portion of the long term debt and cash flow after dividends it is 1.99. This is, of course, where this stock is vulnerable. A good Liquidity Ratio is 1.50 or higher.

The 5 year low, median and high median Price/Earnings per Share Ratios are 16.05, 17.51 and 18.97. The corresponding 10 year ratios are 13.63, 15.06 and 16.50. The historical ones are 12.97, 15.07 and 16.07. The current P/E Ratio is 17.03 based on a stock price of $58.91 and 2017 EPS estimate of $3.46. Based on recent data the stock price is reasonable and below the median. Based on longer term data, the stock price would seem to be expensive.

I get a Graham Price of $34.79. The 10 year low, median and high median Price/Graham Price Ratios are 1.19, 1.42 and 1.54. The current P/GP Ratio is 1.69 based on a stock price of $58.91. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year Price/Book Value per Share Ratio of 2.90. The current P/B Ratio is 3.79. The current P/B Ratio is some 31% higher than the 10 year ratio. The current ratio is based on BVPS of $15.55 and a stock price of $58.91.

I get an historical dividend yield of 4.54%. The current dividend yield is some 7.3% higher at 4.87%. The current dividend yield is based on dividends of $2.87 and a stock price of $58.91. A higher dividend yield is better. This stock price testing suggests that the stock price is reasonable and below the median. The current dividend yield is also about the same as the 5 year median dividend yield of 4.89%.

When I look at analysts' recommendations, I find Buy, Hold and Underperform Recommendations. Most of the recommendations are a Hold and the consensus recommendation would be a Hold. The 12 month stock price is $59.88. This implies a total return of 6.52% with 1.65% from capital gains and 4.87% from Dividends based on a current stock price of $59.91.

There is an article by Emily Jackson in the Financial Post about BCE spending $854M on fiber-to-the-home broadband connections in its home base of Montreal. In another article by Emily Jackson in the Financial Post, she talks about BCE's CEO Cope's compensation reduced by 7% in 2016. Demetris Afxentiou of Motley Fool thinks that BCE remains a buy and forget superstar. See what analysts are saying about this stock on Stock Chase. They mainly like 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 Inc.

The last stock I wrote about was about was Melcor Developments Inc. (TSX-MRD, OTC-MODVF)... learn more . The next stock I will write about will be Sun Life Financial Inc. (TSX-SLF, NYSE-SLF)... learn more on Wednesday, March 29, 2017 around 5 pm. Tomorrow on my other blog I will write about Sectors I Invest In... learn more on Tuesday, March 28, 2017 around 5 pm.

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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.