Is it a good company at a reasonable price? I think this is a good company and it is a core stock for me. I will be keeping the shares I have. I will not be buying any more as I have enough of this company in my portfolio. The stock price is reasonable, and it may even be cheap.

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. Since I bought this stock, 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 I have had this stock for 35 years and have made a total return of 12.52% with 6.54% from capital gains and 5.98% from dividends. There has been a lot of changes in this stock where they spin off both Nortel and Bell Alient. Every time they did such things, I ended up with an odd number of shares. I return is not the same as the returns of 35 years below, but it is probably because I bought shares over several years.

If you had invested in this company in December 2012, for $1,023.12 you would have bought 24 shares at $42.63 per share. In December 2022, after 10 years you would have received $704.34. in dividends. The stock would be worth $1,427.76. Your total return would have been $2,132.10.

Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
---|---|---|---|---|---|---|

$42.63 | $1,023.12 | 24 | 10 | $704.34 | $1,427.76 | $2,132.10 |

If you had invested in this company in December 2002, for $1,023.00 you would have bought 36 shares at $28.50.63 per share. In December 2022, after 20 years you would have received $1,588.68 in dividends. The stock would be worth $2,141.64. Your total return would have been $3,730.32.

Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
---|---|---|---|---|---|---|

$28.50 | $1,026.00 | 36 | 20 | $1,588.68 | $2,141.64 | $3,730.32 |

The dividend yields are good with dividend growth low. The current dividend yield is good (5% to 6% range) at 6.37%. The 5 and 10 year median dividend yields are also good at 5.59% and 5.22%. The historical median dividend yield is moderate (2% to 4% ranges) at 4.13%. The growth in dividends has been low (below 8% per year) at 5.1% per year over the past 5 years. The last dividend increase occurred in 2023 and it was for 5.2%.

Some Dividend Payout Ratios (DPR) are too high, like the ones for Earnings. The DPR for EPS for 2022 are 122% with 5 year coverage at 109%. The DPR for EPS for 2023 is expected to be lower at 118%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 are 109% and 100%. The DPR for AEPS for 2023 is expected to be higher at 119%, but be around 100% in 2025. These DPRs are too high. The DPR for Cash Flow per Share (CFPS) for 2022 is 33% and with 5 year coverage at 32% and these are fine. The DPR for Free Cash Flow for 2022 is 103% with 5 year coverage at 98%. This DPR is expected to be 90% in 2023.

It would be good if they improved the Liquidity Ratio, but other ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.51. The Liquidity Ratio for 2022 is too low at 0.57. If you add in cash flow after dividends it is only 1.01. If you also add back in the current portion of the long term debt it is 1.57. What you want is a ratio of 1.50 or above. Depending on rolling over long term debt to get there is risky. The Debt Ratio is 1.48 and I prefer this to be 1.50 or higher.

The Total Return per year is shown below for years of 5 to 40 to the end of 2022. 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. |
---|---|---|---|---|---|

2017 | 5 | 5.10% | 5.17% | -0.30% | 5.47% |

2012 | 10 | 5.17% | 9.22% | 3.39% | 5.83% |

2007 | 15 | 6.27% | 7.64% | 2.74% | 4.89% |

2002 | 20 | 5.70% | 8.68% | 3.75% | 4.93% |

1997 | 25 | 9.03% | 9.13% | 4.25% | 4.88% |

1992 | 30 | 7.62% | 8.09% | 4.01% | 4.09% |

1987 | 35 | 6.75% | 7.34% | 3.75% | 3.59% |

1982 | 40 | 6.43% | 9.06% | 4.90% | 4.16% |

The 5-year low, median, and high median Price/Earnings per Share Ratios are 18.14, 20.27 and 22.39. The corresponding 10 year ratios are 16.39, 18.28 and 19.63. The corresponding historical ratios are 15.64, 17.58 and 18.25. The current P/E Ratio is 18.70 based on a stock price of $60.79 and EPS estimate for 2023 of $3.25. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I also have Adjusted Earnings per Share (AEPS) Data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 16.81, 19.00 and 20.99. The corresponding 10 year ratios are 15.46, 16.89 and 18.38. The current P/AEPS Ratio is 19.00. This is at the median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and at the median.

I get a Graham Price of $37.88. The 10-year low, median, and high median Price/Graham Price Ratios are 1.44, 1.63 and 1.75. The current P/GP Ratio is 1.60 based on a stock price of $60.79. The current ratio is between the low and median ratios of the 10 year median ratios. 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 3.20. The current P/B Ratio is 3.05 based on a stock price of $60.79, Book Value per Share of $19.93 and Book Value of $18,175M. The current P/B Ratio is 3.05 based on a stock price of $60.79. The current ratio is 4.7% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I also have a Book Value per Share estimate of $21.60. This implies a ratio of 2.81 with a stock price of $67.79 and Book Value of $19,699M. This ratio is 12% below the 10 year median ratio. 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 6.96. The current P/CF Ratio is 6.61 based on Cash Flow per Share estimate for 2023 of $9.20, Cash Flow of $8,023M and a stock price of $60.79. This ratio is 5% below the 10 year median 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 4.13%. The current dividend yield is 6.37% based on dividends of $3.87 and a stock price of $60.79. The current dividend yield is 54% 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 5.22%. The current dividend yield is 6.37% based on dividends of $3.87 and a stock price of $60.79. The current dividend yield is 22% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10-year median Price/Sales (Revenue) Ratio is 2.26. The current P/S Ratio is 2.24 based on Revenue estimate of $24,792M, Revenue per Share of $27.18 and a stock price of $60.79. The current ratio is 1.2% 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 reasonable and may be cheap. The dividend yield tests are saying the stock price is cheap. The P/S Ratio test is saying the stock price is reasonable and below the median. Most of the other tests are showing that the stock price is reasonable and below or at the median.

When I look at analysts’ recommendations, I find Strong Buy (2), Buy (3) and Hold (13). The consensus would be a Buy. The 12 month stock price consensus is $65.53. This implies a total return of 14.16% with 7.80% from capital gains and 6.37% from dividends based on a stock price of $60.79.

Most Analysts like this stock on Stock Chase. Stock Chase gives this stock 5 stars out of 5. It is not on the latest Money Sense list, but has been on this list in the past. Vishesh Raisinghani on Motley Fool thinks it has a safe dividend and future growth. Karen Thomas on Motley Fool thinks this is a blue chip that is mispriced. The company put out a press release on Newswire about their fourth quarter of 2022.

Simply Wall Street on Yahoo Finance talks about ownership of shares of this company. Simply Wall Street gives out 3 warnings of dividend of 6.39% is not well covered by earnings or cash flows; has a high level of debt; and significant insider selling over the past 3 months. Simply Wall Street gives this stock 3 stars out of 5.

BCE provides wireless, broadband, television, and landline phone services in Canada. It is one of the big three national wireless carriers, with about 30% of the market. It is also has ILEC throughout much of the eastern half of Canada, including in the most populous Canadian provinces: Ontario and Quebec. 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 Hydro One Ltd (TSX-H, OTC-HRNNF) ... learn more. The next stock I will write about will be Melcor Developments Inc (TSX-MRD, OTC-MODVF) ... learn more on Wednesday, April 5, 2023 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks April 2023.... learn more on Tuesday, April 4, 2023 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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