Sound bite for Twitter and StockTwits is: Dividend Growth Telecom. The stock price is probably reasonable. Insider have been sellers of this stock this year. There has been no insider buying since the current bear market started. This is interesting. The DPR for EPS needs to be improved. See my spreadsheet on BCE Inc .
I own this stock of BCE Inc (TSX-BCE, NYSE-BCE). I bought this stock in 1982 and have held it ever since. Since I bought it 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.
When I was updating my spreadsheet, I noticed because I had this stock since 1982 and I only started with Quicken in 1988 and because of the spin offs of Nortel and Bell Aliant, I can only judge the total return with BCE because including Nortel and Bell Aliant in with BCE. I sold off both Nortel and Bell Aliant. Because I sold half my Nortel soon after getting the shares in my account (and half when the price had crashed) is part of the reason I have done well. My total return on BCE is 10.20% per year since 1988. This is quite good.
It is interesting that since this stock has tanked along with the stock market, there has been no insider buying. Insider selling has stopped. There was a lot of insider selling over the past year. The Net Insider Selling at 0.19%. You would expect this to be at 0.01% or 0.02% at the most.
I have also noticed that the Stock Price given by TD Bank and the ones I have collected over the years vary. TD has a higher total return after 15 years than what I do. Although, my values come closer to what I have experience with this stock over the years. Of course, it could come down to how they and I have handled the spin offs over the years.
The dividend yields are moderate with dividend growth low. The current yield is in the good range (5 and 6% ranges) as is to be expected as we are in a bear market. The current yield is 6.11%. The other median dividend yields of 5, 10 and historical are in the moderate range (2% to 4%). The 5, 10 and historical median dividend yields are 4.73%, 5.73% and 4.63%.
The Dividend Payout Ratios are mostly too high and need improvement. The DPR for EPS for 2019 is 93% with 5 year coverage at 89%. Analysts think that it will be higher this year and do not see any retreat in this ratio in the short term. These ratios are too high. The DPR for CFPS is good (under 40%) in 2019 at 30% and 5 year coverage at 33%. The DPR for Free Cash Flow is probably also too high at 71% in 2019 with 5 year coverage at 80%.
Debt Ratios are fine. Long Term Debt/Market Cap Ratio for 2019 is 0.41. It has decreased to 0.46 currently. (With this ratio, lower is better.) The Liquidity Ratio is 0.56 and it has always been too low. You have to added in cash flow after dividends and current portion of the long term debt to get to a good ratio. That ratio for 2019 is 1.98. The Debt Ratio for 2019 is good at 1.55. The Leverage and Debt/Equity Ratios for 2019 are 2.81 and 1.81 respectively and are fine.
The Total Return per year is shown below for years of 5 to 36 to the end of 2019. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below. I am not surprised that the 20 year total return is negative, as the stock market hit a very high value at the end of 1999, especially for any stock connected in any way to tech. (Also note above the TD bank gives different values for longer terms.)
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 5.17% | 7.52% | 2.46% | 5.06% |
| 2009 | 10 | 7.08% | 13.72% | 7.57% | 6.15% |
| 2004 | 15 | 6.61% | 9.81% | 5.00% | 4.81% |
| 1999 | 20 | 4.91% | -0.99% | -3.22% | 2.23% |
| 1994 | 25 | 3.91% | 9.38% | 4.52% | 4.86% |
| 1989 | 30 | 3.57% | 8.31% | 3.72% | 4.59% |
| 1984 | 35 | 3.43% | 9.26% | 4.00% | 5.26% |
| 1983 | 36 | 3.47% | 13.37% | 5.34% | 8.03% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.41, 17.95 and 19.48. The corresponding 10 year ratios are 15.95, 17.54 and 19.02. The corresponding historical ratios are 14.1, 16.76 and 17.12. The current P/E Ratio 15.71 based on a stock price of $54.50 and 2020 EPS estimate of $3.47. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $38.40. The 10 year low, median, and high median Price/Graham Price Ratios are 1.42, 1.56 and 1.71. The current P/GP Ratio is 1.42 based on a stock price of $54.50. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 3.13. The current P/B Ratio is 2.89 based on a Book Value of $17,070M, Book Value per Share of $18.88 and a stock price of $54.50. The current ratio is 8% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 4.63%. The current dividend yield is 6.11% based on a stock price of $54.50 and dividends of $3.33. The current yield is 32% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 5.17%. The current dividend yield is 6.11% based on a stock price of $54.50 and dividends of $3.33. The current yield is 18% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 2.06. The current P/S Ratio is 2.02 based on 2020 Revenue estimate of $24,372M, Revenue per Share of $26.96 and a stock price of $54.50. The current ratio is 2% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable It is surprising that a lot of this testing is showing the stock price as reasonable rather than cheap. The P/S Ratio which cannot be ignored is showing the stock price as just 2% below the median. The good news seems to be that the yield is relatively high.
Is it a good company at a reasonable price? I will continue to hold my shares in BCE but I am not planning on buying any more even though this company is not very large as a percentage of my holdings. This is the first stock I bought, so I will keep it. However, I am unsure of how good a business a telecom is at present.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (4), Hold (8) and Sell (2). The consensus would be a Buy. The 12 month stock price consensus is $63.03. This implies a total return of 21.76% with 15.65% from capital gains and 6.11% from dividends.
See what analysts are saying on Stock Chase. Some like it but others say it is a slow growth company. Haris Anwar on Motley Fool thinks BCE is a low risk stock with a strong cash flow. A writer on Simply Wall Street does not like the EPS dividend coverage, but says FCF coverage is fine. A writer on Simply Wall Street in September 2019 said the intrinsic value of BCE was $113, and so the stock was undervalued.. Debasis Saha on Insider Monkey says Hedge Funds have never before been this bullish on BCE.
BCE is both a wireless and Internet service provider, offering wireless, broadband, television, and landline phone services in Canada. It is one of the big three national wireless carriers, with its nearly 10 million customers constituting about 30% of the market. Its web site is here BCE Inc.
The last stock I wrote about was about was AltaGas Ltd (TSX-ALA, OTC-ATGFF) ... learn more. The next stock I will write about will be Melcor Developments Inc (TSX-MRD, OTC-MODVF) ... learn more on Friday, March 27, 2020 around 5 pm. Tomorrow on my other blog I will write about Enbridge Inc.... learn more on Thursday, March 26, 2020 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment