Is it a good company at a reasonable price? The stock price is still probably reasonable. I have owned this stock for some 34 years and I plan to keep it. I do not plan to buy anymore as I have enough. It has a nice yield, currently over 5% and some capital growth. Analysts are probably right that it is a good passive income stock.
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, it 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. In 2016 I sold Manitoba Telecom. To keep the same in Telecom category, I bought some more BCE with the proceeds.
When I was updating my spreadsheet, I noticed that for this stock which I own, I have overall done well. It is not easy to analyze because changed over the years, including the spin-off of Nortel and Bell Alient. I have had this stock for some 34 years and have made a profit of 12.65% with 6.96% from capital gains and 5.69% from dividends. I have to consider all these stocks in order to get to what I have really done. It is a good job I keep good records.
If you had invested in this company in December 2011, $1,019.28 you would have bought 24 shares at $42.47 per share. In December 2021, after 10 years you would have received $669.78 in dividends. The stock would be worth $1,583.60. Your total return would have been $2,263.38.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $42.47 | $1,019.28 | 24 | 10 | $669.78 | $1,583.60 | $2,263.38 |
The dividend yields are good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 5.25%. The 5 and 10 year median dividend yields are also good at 5.36% and 5.17%. The historical dividend yield is moderate (2% to 4% ranges) at 4.10%. The dividend increases are low (below 8%) at 5.09% per year over the past 5 years. The last dividend increase was in 2022 and it was for 5.14%.
The Dividend Payout Ratios (DPR) are too high. The DPR for EPS for 2021 is 116% with 5 year coverage at 102%. The DPR for EPS is not expected to fall below 100% over the next 3 years. The DPR for Cash Flow per Share for 2021 is 33% with 5 year coverage at 31%. This is fine as anything at 40% or lower is a good value. The DPR for Free Cash Flow for 2021 is 273% with 5 year coverage at 92%. The DPR for FCF is expected to be below 100% in 2023
BCE also puts out an Adjusted EPS values. The DPR for Adj EPS is not much better with DPR for 2021 at 108% and 5 year coverage at 95%. The DPR for Adj EPS is not expected to fall below 100% over the next three years (of analysts estimates).
Debt Ratios are fine, but Liquidity Ratio could improve. Long Term Debt/Market Cap Ratio for 2021 is 0.45 and this is good and low. The Liquidity Ratio for 2021 is 0.65. Even adding in cash flow after dividends it only gets to 1.21. I prefer this to be 1.50 or higher. The Debt Ratio is fine at 1.52. The Leverage and Debt/Equity Ratios are fine at 2.91 and 1.91 respectively.
The Total Return per year is shown below for years of 5 to 39 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 5.09% | 7.84% | 2.73% | 5.11% |
| 2011 | 10 | 5.39% | 9.88% | 4.57% | 5.31% |
| 2006 | 15 | 6.63% | 12.77% | 6.99% | 5.78% |
| 2001 | 20 | 5.43% | 7.05% | 3.11% | 3.95% |
| 1996 | 25 | 8.81% | 7.05% | 3.40% | 3.66% |
| 1991 | 30 | 7.49% | 7.32% | 3.91% | 3.41% |
| 1986 | 35 | 6.69% | 7.31% | 4.08% | 3.23% |
| 1982 | 39 | 6.46% | 9.22% | 5.33% | 3.89% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 18.14, 19.28 and 20.16. The corresponding 10 year ratios are 16.39, 17.83 and 19.39. The corresponding historical ratios are 15.64, 17.54 and 18.25. The current P/E Ratios 21.42 based on a stock price of $70.04, and EPS estimate for 2022 of $3.27. The current ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $38.83. The 10 year low, median, and high median Price/Graham Price Ratios are 1.47, 1.66 and 1.82. The current P/GP Ratio is 1.80 based on a stock price of $70.04. The current ratio is between the median and high ratios of the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Book Value per Share Ratio of 3.13. The current P/B Ratio is 3.42 based on Book Value for 2021 of $18,632M, Book Value per Share of $20.50 and a stock price of $70.04. The current P/B Ratio is 9% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
There is also a 12 month Book Valuer per Share estimate of $22.20. This estimate gives a P/B Ratio of 3.15 and a Book Value of $20,180M. The P/B Ratio is 0.7% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and at the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.82. The current P/CF Ratio is 7.69 based on Cash Flow per Share estimate for 2022 of $9.11, Cash Flow of $8,281M and a stock price of $70.04. The current ratio is 13% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 4.10%. The current dividend yield is 5.25% based on a stock price of $70.04 and dividends of $3.44. The current dividend yield is 28% above 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 5.25% based on a stock price of $70.04 and dividends of $3.44. The current dividend yield is 2% above the historical 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 2.23. The current P/S Ratio is 2.63 based on a stock price of $70.04, Revenue estimate for 2022 of $24,211 and Revenue per Share of $26.63. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. A lot of people think that the better measurement is with the 10 year median dividend yield test rather than to historical dividend yield test. This test says that the stock price is relatively reasonable and below the median and at 2% is close to the median. The P/S Ratio test says the stock price is relatively reasonable but above the median. Most of the testing is suggesting that the stock price is relatively reasonable and above or below the median.
Results of stock price testing last year is that the stock price was 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.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (3), Hold (11) and Sell (1). The consensus would be a Buy, but there is a wide range of opinion. The 12 month consensus stock price of $67.18 (from $60.00 to $71.00). A 12 month stock price of $67.18 implies a total return 1.17% with a 4.08% capital loss and dividends of 5.31% based on a current stock price of $70.04.
When I look at analysts’ recommendations last year, I found 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 based on a stock price of $56.85. What happened was a stock rise of $69.30 and a total return of 28.06% with 21.90% from capital gains and 6.16% from dividends based on a starting stock price of $56.85.
Analysts on Stock Chase say to buy this stock for income and stability. Stock Chase gives this stock 5 stars out of 5. Andrew Walker on Motley Fool says this is a good defensive stock for passive income. Rajiv Nanjapla on Motley Fool says the company has growth initiatives that could boost income so he is bullish on this stock. In a Press Release the company talks about the fourth quarter results. A Simply Wall Street report on Yahoo Finance says that the one year Total Shareholder Return (TSR) is better than the 5 year TSR so the stock’s performance is improving. Simply Wall Street gives 3 warnings signs for BCE of Dividend of 5.31% is not well covered by earnings or forecast to be in the next 3 years; Has a high level of debt and Significant insider selling over the past 3 months. I note that CEO and CFO has sold shares in the past 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. 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 Monday, April 4, 2022 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.
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