Is it a good company at a reasonable price? The thing is, what you pay for a stock does affect your long term return. The time to buy a stock is when it is cheap. However, that is also the scariest time. I think I have enough of this stock, so I am not buying any more at the present time. However, I have no intentions of selling any that I own. I still consider this a core stock for my portfolio. The stock price is cheap at the current time.
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 I have had this stock for 36 years and I have made a total return per year of 12.34% with 5.78% from capital gains and 6.56% from dividends. Over the years there has been a lot of changed in my stock what with them throwing off Nortel and then Bell Aliant. It makes looking at the stock complex, but this is my return according to Quicken. I think that I did so well because I sold half my Nortel at a high price.
If you had invested in this company in December 2013, for $1,012.00 you would have bought 22 shares at $46.00 per share. In December 2023, after 10 years you would have received $678.81 in dividends. The stock would be worth $1,147.74. Your total return would have been $1,826.55. This would be a total return of 7.46% per year with 1.27% from capital gain and 6.20% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $46.00 | $1,012.00 | 22 | 10 | $678.81 | $1,147.74 | $1,826.55 |
The current dividend yield is high with dividend growth low. The current dividend is high (7% and higher) at 8.71%. The 5 and 10 year median dividend yields are good (5% to 6% ranges) at 5.67% and 5.32%. The historical median dividend yield is moderate (2% to 4% ranges) at 4.22%. The dividend increases are low (below 8% per year) at 5.1% per year over the past 5 years. The last dividend increase was 2023 and it was for 3.10%.
The Dividend Payout Ratios (DPR) are too high with the only good one for Cash Flow per Share. The DPR for 2023 for Earnings per Share (EPS) is far too high at 168% with 5 year coverage at 121%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is far too high at 119% with 5 year coverage at 106%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 33% with 5 year coverage at 32%. The DPR for 2023 for Free Cash Flow 1 (FCF) is far too high 111% with 5 year coverage at 105%. The DPR for 2023 for Free Cash Flow 2 (FCF) is far too high 111% with 5 year coverage at 91%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 167.65% | 120.57% |
| AEPS | 119.08% | 106.88% |
| CFPS | 33.47% | 32.44% |
| FCF 1 | 110.88% | 105.05% |
| FCF 2 | 110.88% | 90.92% |
Debt Ratios show debt is too high and Liquidity Ratio too low. The Long Term Debt/Market Cap Ratio for 2023 is fine at 0.65 and currently at 0.73. The Liquidity Ratio for 2023 is far too low at 0.65. If you added in Cash Flow after dividends, the ratios are still far too low at 1.02 and currently at 0.95. If you add back in the current portion of the debt, they are fine at 1.75 and currently at 1.62 but check debt is being rolled over. The Debt Ratio for 2023 is fine at 1.68 and 1.68 currently. The Leverage and Debt/Equity Ratios for 2023 are too high at 3.50 and 2.50. I prefer these to be less than 3.00 and 2.00
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.65 | 0.73 |
| Intang/GW | 0.58 | 0.65 |
| Liquidity | 0.65 | 0.65 |
| Liq. + CF | 1.02 | 0.95 |
| Liq. + CF + D | 1.75 | 1.62 |
| Debt Ratio | 1.40 | 1.40 |
| Leverage | 3.50 | 3.50 |
| D/E Ratio | 2.50 | 2.50 |
The Total Return per year is shown below for years of 5 to 41 to the end of 2023. 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 think why my return is so good is because I sold half my Nortel at a very good price.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2018 | 5 | 5.09% | 5.81% | -0.66% | 6.47% |
| 2013 | 10 | 5.14% | 7.46% | 1.27% | 6.20% |
| 2008 | 15 | 11.67% | 12.36% | 4.99% | 7.37% |
| 2003 | 20 | 5.96% | 8.46% | 3.00% | 5.46% |
| 1998 | 25 | 9.25% | 3.72% | 0.09% | 3.63% |
| 1993 | 30 | 7.73% | 7.57% | 3.18% | 4.40% |
| 1988 | 35 | 6.84% | 7.39% | 3.36% | 4.02% |
| 1983 | 40 | 6.40% | 7.36% | 3.53% | 3.83% |
| 1982 | 41 | 8.92% | 4.45% | 4.48% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 18.41, 21.01 and 23.62. The corresponding 10 year ratios are 16.39, 18.95 and 19.97. The corresponding historical ratios are 15.85, 17.65 and 18.97. The current P/E Ratio is 17.05 based on an EPS estimate for 2024 of 2.69 and a stock price of $45.80. This ratio is between the low and median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below 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 15.51, 17.31 and 18.54. The current P/AEPS Ratio is 14.97 based on AEPS estimate for 2024 of $3.06 and a stock price of $45.80. The current ratio is below the low 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $35.35. The 10-year low, median, and high median Price/Graham Price Ratios are 1.44, 1.63 and 1.76. The current P/GP Ratio is 1.30 based on a stock price of $45.80. This ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 3.22. The current P/B Ratio is 2.52 based on a Book Value of $16,562M, Book Value per Share of $18.15 and a stock price of $45.80. The current ratio is 22% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share estimate for 2024 of $19.20. The analyst calculates the Book Value different from me. The 10 year median P/B Ratio is 2.64. The Book Value per Share estimate of $19.20 implies a Book Value of $17,516M, a P/B Ratio is 2.39 with a stock price of $45.80. This ratio is 10% 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 5.81 based on Cash Flow per Share estimate for 2024 of $7.88, Cash Flow of $7,189M and a stock price of $45.80. The current ratio is 17% 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 4.22%. The current dividend yield is 8.71% based on a stock price of $45.80 and dividends of $3.96. The current yield is 106% above the historical median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 5.32%. The current dividend yield is 8.71% based on a stock price of $45.80 and dividends of $3.96. The current yield is 64% above the 10 year median ratio. 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 1.67 based on Revenue estimate for 2024 of $24,953, Revenue per Share of $27.35 and a stock price of $45.80. The current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. The dividend yield tests are saying this. The cheap rating is confirmed by the P/S Ratio test. Other tests are saying the stock price is either cheap or reasonable and below the median.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (4), Hold (13) and Underperform (1). The consensus would be a Hold. The 12 month stock price consensus is $54.79 with a high of $60.00 and low of $48.00. The consensus stock price implies a total return of $28.34% with 19.63% from capital gains and 8.71% from dividends.
There are lots of entries on Stock Chase for this stock and lot of them are Do Not Buy or Sell, but there are some buys. Stock Chase gives this company 5 stars out of 5. It has been taken off the MoneySense list, but is on the other two dividend lists that I follow. Puja Tayal on Motley Fool says buy for the dividend yield. Demetris Afxentiou Motley Fool thinks this is a long term buy and has a insanely high dividend yield. The company put out a press release on Newswire about their fourth quarter of 2023 results.
Simply Wall Street on Yahoo Finance talk about who owns this company. Simply Wall Street has 2 warnings out on this company of dividend of 8.67% is not well covered by earnings or cash flows; and has a high level of debt. Simply Wall Street gives this stock 2 and one half 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 over 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 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 3, 2024 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks April 2024 .... learn more on Tuesday, April 2, 2024 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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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What is the difference between FCF1 and FCF2?
ReplyDeleteFCF1 is from BCE, FCF2 is from WSJ. Also, the FCF from Morningstar is different. Market Screener seems to agree with the FCF from BCE. The problem with FCF has always been that different sites get different values.
ReplyDelete