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 that I have done well in this stock. My total return to the end of February 2021 is 10.02% for this stock that I first bought in 1982, but have only been tracking in Quicken since 1987. When I calculate my total return, I have to consider both Bell Aliant and Nortel which were both spun off by this company.
The dividend yields are good with dividend growth low. The dividend yields are good (5% to 6% ranges) with the current dividend yield at 6.16%. The 5, 10 and historical dividend yields are also good at 5.29%, 5.17% and 5.14% respectively. The dividend growth is low (under 8%) with a 5 year increase of 5.08% per year. The last increase was for 5.1% and it was in 2021.
The Dividend Payout Ratios (DPR) could be improved. The DPR for EPS was 119% in 2020 with a 5 year coverage of 95%. The DPR for CFPS for 2020 was 32% with 5 year coverage at also 32%. The DPR for Free Cash Flow was 89% with 5 year coverage at 79%. Some site agree sometimes on what FCF is.
Debt Ratios are fine. The Long Term Debt/Market Cap ratio for 2021 is fine at 0.49. They can pay off the long term debt in 3 years with cash flow and that is also fine. The Liquidity Ratio for 2021 is 0.69 and that is low. If you add in cash flow after dividends it is 1.27 and still low as I like this to be at least 1.50. The Debt Ratio is good at 1.54. The Leverage and Debt/Equity Ratios are 2.84 and 1.84 and these are also fine.
The Total Return per year is shown below for years of 5 to 38 to the end of 2020. 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.
|From||Years||Div. Gth||Tot Ret||Cap Gain||Div.|
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 16.21, 17.65 and 19.19. The corresponding historical ratios are 15.28, 17.51 and 18.14. The current P/E Ratio is 18.34 based on a stock price of $56.85 and EPS estimate for 2021 of $3.10. The current P/E Ratio is between the median and high median ratios of 17.65 and 19.19. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $36.19. The 10 year low, median, and high median Price/Graham Price Ratios are 1.46, 1.63 and 1.77. The current P/GP Ratio is 1.57 based on a stock price of $56.85. The current ratio is between low median and median ratios of 1.46 and 1.63. 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 3.03 based on a stock price of $56.85, Book Value of $16,986M and Book Value per Share of $18.78. The current ratio is 3% below the 10 year median ratio of 3.13. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.76. The current P/CF Ratio is 6.53 based on Cash Flow per Share estimate for 20201 of $8.70, Cash Flow of $7,868M and a stock price of $56.85. The current ratio is 3% below the 10 year median ratio of 6.76. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 5.14%. The current dividend yield is 6.16% based on dividends of $3.50 and a stock price of $56.85. The current dividend yield is 20% above the historical median dividend yield of $5.14%. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 5.17%. The current dividend yield is 6.16% based on dividends of $3.50 and a stock price of $56.85. The current dividend yield is 19% above the historical median dividend yield of $5.14%. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 2.18. The current P/S Ratio is 2.17 based on a stock price of $56.85, Revenue estimate for 2021 of $23,362M, and Revenue per Share of $26.15. The current P/S Ratio is .3% below the 10 year median 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. Both the Dividend Yield tests say the stock price is cheap, but this is not confirmed by the P/S Ratio test that says it is reasonable and below the median.
Is it a good company at a reasonable price? I own this stock and I intend to keep it. I have made a reasonable return over the 33 years I have held this stock (10.02% total return per year). It is a dividend growth stock. For most of the years noted above, total return has been 8% and above. The stock price would be reasonable and below the median.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (5), Hold (9) and Sell (1). The consensus would be a Buy. The 12 month stock price consensus is $60.32. This implies a total return of 12.26% with 6.10% from capital gains and 6.16% from dividends.
Analysts like this stock on Stock Chase. Either it is a buy or a top pick. Rajiv Nanjapla on Motley Fool lists this stock as one of that is currently safe to buy. The executive summary on Simply Wall Street give this stock 3 stars out of 5 and list three risks. A writer on Simply Wall Street points out that BCE’s dividend is not well covered by EPS. The Blogger Dividend Earner did a review of this stock in January of this year.
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 roughly 10 million customers constituting about 30% of the market. Additionally, BCE has a media segment, which holds television, radio, and digital media assets. 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, April 2, 2021 around 5 pm. Tomorrow on my other blog I will write about Value and Growth Investing .... learn more on Thursday, April 1, 2021 around 5 pm.
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