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. In 2016 I sold Manitoba Telecom. To keep the same in Telecom category, I bought some more BCE with the proceeds.
The problem with looking at BCE long term is that they have spun off Nortel. They bought and then spun of Bell Aliant. Because I have owned BCE since 1987, my spreadsheet covers all this. What I did not like about Bell spinning off these companies is that I ended up with odd lots of stock each time. They could have organized the spin off better. Other companies do not let you end up with odd lots of shares because of spin-offs.
There are a few of cautionary notes. This first is the problem with Book Value in that it has declined over the past 10 years by 0.65% per year and has only grown by 4.47% per year over the past 5 years. The second one is that the Dividend Payout Ratio is a bit too high. The 5 year coverage is 86% and I would prefer to see this at 80% or lower.
The next cautionary is concerns comprehensive income. For this company there is a big difference between comprehensive income and net income with comprehensive income being a lot lower. In 2017 the comprehensive income is 30% lower and the 5 year median difference is 30%. This is a lot. This could point to Net Income or EPS not being of good quality.
Lastly, we should not ignore the fact that the current P/S Ratio is some 39% higher than the 10 year median P/S ratio. This by itself would not suggest an expensive stock, but it should give you pause.
Dividends have generally been in the good range (4 to 5%). The current dividend yield is 5.75% with 5, 10 and historical dividend yields at 4.73%, 5.02% and 4.63%. Dividend growth has been low (that is below 8%). I have data going back some 34 years. The dividends have grown at 5.25%, 6.86%, 5.90%, 4.39%, 3.69%, 3.34% and 3.37% per year over the past 5, 10, 15, 20, 25, 30 and 34years.
Dividend Payout Ratios are a little high. I prefer them to be 80% or lower for utility stocks and this is basically a utility stock. The DPR for 2018 was 91% with 5 year coverage of 86%. The 5 year coverage is probably the most important figure. For 2018 analysts expect the DPR to be around 86% with 5 year coverage at 85%. The DPR for CFPS for 2017 was at 27% with 5 year coverage at 35%. This is fine.
I have total return going back some 35 years. I think total return at around 8% for the long term is a good return. The total return for this stock over the past 5, 10, 15, 20, 25, 30 and 35 years is 12.45%, 8.51%, 9.17%, 9.90%, 9.63%, 9.37% and 13.45% per year.
The portion of the total return attributed to capital gains over these time periods is 7.21%, 4.30%, 5.13%, 42%, 4.89%, 4.44% and 5.67% per year. The portion of the total return attributed to dividends over these time periods is 5.24%, 4.22%, 4.04%, 4.48%, 4.74%, 4.93% and 7.79% per year.
The statistics from above in chart form.
|Years||Div Gth||Tot Ret||Cap Gain||Div|
The 5 year low, median and high median Price/Earnings per Share Ratios are 16.37, 17.72 and 19.07. The corresponding 10 year ratios are 15.67, 17.14 and 18.61. The corresponding historical ratios are 12.97, 15.62 and 16.07. The current P/E Ratios are 15.18. This stock price testing would suggest that the stock price is relatively cheap to reasonable and below the median.
I get a Graham Price of $36.19. The 10 year low, median and high median Price/Graham Price Ratios are 1.33, 1.53 and 1.74. The current P/GP Ratio is 1.45 based on a stock price of $52.51. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year Price/Book Value per Share Ratio is 3.07. The current P/B Ratio is 3.12 based on Book Value of $15,156M, Book Value per Share of $16.82 and a stock price of $52.51. The current ratio is some 2% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The historical dividend yield is 4.63%. The current dividend yield is 5.75% based on dividends of $3.02 with a stock price of $52.51. The current yield is some 24% above the historical median dividend yield. This stock price testing would suggest that the stock price is relatively cheap.
I get a 10 year median Price/Sales (Revenue) Ratio of 1.68. The current P/S Ratio is 2.02 based on Revenue of $23.371M, Revenue per Share ratio of $25.94 and a stock price of $52.51. The current P/S Ratio is some 21% higher than the 10 year median ratio. This stock price testing would suggest that the stock price is relatively expensive.
When I look at analysts' recommendations I find Strong Buy (2), Buy (7), Hold (11) and Underperform (1). The consensus would be a Hold. The 12 month stock price consensus is $61.32. This implies a total return of 22.53% with 16.78% from capital gains and $5.75% from dividends based on a current stock price of $52.51.
Jacob Donnelly of Motley Fool thinks it is a good time to buy this stock with the increased yield because of the lower stock price. Interestingly Joey Frenette of Motley Fool gives his reason why not to buy this stock. Vivian Park onBZ Weekly talks about expected growth in EPS and analysts recent recommendations. See what analysts are saying about this stock on Stock Chase. They like it for the dividends but do not expect much capital growth going forward.
BCE Inc. is a telecommunication company. It caters to residential, business and wholesale customers with solutions for all their communications needs. 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 Friday, April 30, 2018 around 5 pm. Tomorrow on my other blog I will write about Dividend Cuts... learn more on Thursday, April 29, 2018 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.
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