The Company in a Nutshell
- With a +5% yield, this Dividend Aristocrat is better than a bond.
- BCE was associated with the classic wireline phone for many years but has now evolved into the most balanced telecom in Canada.
- The company is a real money printing machine.
- Download PDF format (Last reviewed: August 13th 2019)
|PRO Rating||4||Dividend Yield||4.93%|
|Dividend Safety||4||Dividend Growth Since||2009|
|DDM Valuation||3.42%||Dividend Frequency||Quarterly|
BCE is the largest Canadian telecom by market cap, about twice the size of Telus. It shows the most balanced business model among this small group. BCE has shown a very solid dividend profile for several years and my analysis proves it will continue to rise in the future. All BCE services are based on some sort of monthly subscription generating a consistent base for cash flow. In 2018, the wireline segment comprised 54% of total revenue, while wireless comprised 36%. Media provided the remainder.
|General Information||GE Data|
|Expected Earnings Date||2020-05-01|
|Next ex-dvd date||2020-03-13|
When you have the possibility to invest in a strong yielder as BCE and still hope for a small stock appreciation growth, you must take a hold of it. BCE shows a well-diversified business model and will continue to generate strong cash flow in the future. The company is a real money printing machine. As BCE is part of an oligopoly (Telus, Rogers and BCE controls about 90% of wireless market), there is limited competition and high barriers to entry. Since BCE offers a wide array of products, it can increase revenue generated by each customer.
|5-Yr Rev. Growth:||2.63%|
|5-Yr EPS Growth:||2.56%|
|5-Yr Div Growth:||5.12%|
BCE debt level is not be underestimated. BCE is a giant… with a giant debt. This is not a perfect situation as interest rates are now rising. As the Canadian Government keeps pushing for more competition in the wireless industry, BCE may see additional competitors adding more pressure on margins in the future. BCE will also have to invest massively in 5G to remain competitive. This means lots of money spend outside their dividend growth policy.
|Financial Debt to EBITDA (TTM)||2.74|
|Current Ratio (Quarterly)||0.56|
|Free Cash Flow (Quarterly)($B)||0.938|
Dividend Growth Perspective
Management maintained a high (but under control) payout ratio over the past 10 years. While distribution increased steadily since 2010, the cash payout didn’t move much. BCE should remain cautious, but there is room for dividend growth. BCE is probably the best compromise for an income seeker. While its stock is relatively stable, shareholders enjoy a steady yield. Since payment is secure, BCE falls into the “buy and sleep” stock.
|Payout Ratio (%)||92.95%|
|Cash Payout Ratio (%)||73.74%|
|Enter Expected Dividend Growth Rate Years 1-10:||5.00%|
|Enter Expected Terminal Dividend Growth Rate:||5.00%|
|Calculated Intrinsic Value OUTPUT 15-Cell Matrix||Metric2||Metric3||Metric4|
|Discount Rate (Horizontal)||Discount Rate (Horizontal)||Discount Rate (Horizontal)|
|Margin of Safety||9.00%||10.00%||11.00%|
|Market Cap ($)||58B|
|Price to Book Ratio||3.38|
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- Dividend triangle chart is updated every 6 months.
- All other metrics are updated every 5 minutes (price) or weekly.
- The PDF format includes only comments (no metrics) and are reviewed every 6 months.