BCE (BCE) raises dividend by 1% & offers a level of safety.

BCE Inc.’s (NYSE:BCE) dividend was increased by 5%.  Its overall yield is 4.99%. The firm started paying a dividend in 1983.

BCE is the AT&T or Verizon of Canada.  The telecommunications giant has nearly 10 million residential and business customers. It maintains traditional phone lines and is the third largest wireless firm in Canada. It also maintains a fiber network for internet access. The firm operates through the Bell Wireless, Bell Media, and Bell Wireline units. Its media division operates 30 TV stations, 106 radio stations, and over 200 unique websites. The firm also has ownership in the Toronto Argonauts Football Club. BCE is located in verdun, Canada and was founded in 1970.

BCE has maintained a three-year growth rate of dividends of 1 percent. BCE currently ranks 2nd in dividend yield within the domestic telecom services category. The quarterly dividend for the April payment will be $0.54 versus the prior year rate of $0.51 per share. BCE Inc. is a member  of our Top 100 Dividend Stocks.  (see below).

top-100

The dividend will be paid at the new higher rate on April 15, 2017, to shareholders of record at close of business on March 15, 2017. BCE Inc. is currently priced at $43.27. Listed in the table below are the quarterly dividend payments since 2010.

Date Quarterly Dividend

Canadian Dollar

Quarterly Dividend

U.S. Dollar

3/15/2017 0.7175 0.54
12/13/2016 0.6825 0.51
9/13/2016 0.6825 0.523
6/13/2016 0.6825 0.534
3/11/2016 0.6825 0.511
12/11/2015 0.65 0.477
9/11/2015 0.65 0.49
6/11/2015 0.65 0.53
3/12/2015 0.65 0.51
12/11/2014 0.6175 0.538
9/11/2014 0.6175 0.565
6/12/2014 0.6175 0.568
3/12/2014 0.6175 0.556
12/12/2013 0.5825 0.55
9/16/2013 0.5825 0.55
6/12/2013 0.5825 0.572
3/13/2013 0.5825 0.577
12/12/2012 0.5675 0.57
9/12/2012 0.5675 0.583
6/13/2012 0.5425 0.528
3/13/2012 0.5425 0.547
12/13/2011 0.5175 0.506
9/13/2011 0.5175 0.518
6/13/2011 0.5175 0.532
3/11/2011 0.4925 0.507
12/13/2010 0.4575 0.453
9/13/2010 0.4575 0.444
6/11/2010 0.435 0.419
3/11/2010 0.435 0.424


Analysis of BCE is based upon our five key criteria for the Top 100 list, which include;

Category Value Score
Dividend Yield 4.99% 35
Dividend Growth (3-7 year avg) 2% 353
Forward P/E 15.49 116
S&P Financial Rating BBB+ 160
Beta 0.70 50
Total Score 714
% Yield 3 Year Div. Growth Rate 7 Year Div. Growth Rate SPS 2016 P/S Ratio 10 yr P/S Low 10 yr P/S High 5 yr low Yield % 5 yr max Yield %
4.99% 1% 3% 19.90 2.21 1.30 2.45 4.16% 5.78%

Positives;

  • BCE’s dividend yield is above that of the S&P 500 Index.
  • BCE has paid out a dividend consecutively for the past 34 years.
  • BCE maintains an investment grade rating of BBB+.
  • BCE maintains a beta of 0.70, lower than the average company.
  • BCE’s current dividend yield (4.99%) is just above its five-year average historical dividend yield.

Negatives;

  • BCE has maintained a three-year growth rate of dividends of 1 percent.
  • BCE is trading above its ten-year average price/sales (P/S) ratio.

Latest Earnings & Overall Analysis:

BCE issued its earnings data on February 2nd. The company reported $0.57 EPS for the Q4 quarter, missing the consensus estimate of $0.59 by a slight margin of $0.02.

2016 2015 2014 2013 2012
Earnings per Share 2.4 2.29 2.73 2.38 3.39
Annual Dividend 2.1 2 2.22 2.18 2.17
Payout Ratio 87.50% 87.34% 81.32% 91.60% 64.01%

The top Canadian telecom operator posted mixed results. Net income for Q4 was $492 million. Total revenue was $4.2 billion, rising by nearly 2% year over year.  BCE generated $1.1 billion of cash from operations.  The telecom giant did have solid free cash flow for Q4, at $691 million.  This also was slightly higher than Q4 2015.  Wireless was the strong element for the firm during Q4.  Bell Wireless sales rose by a solid 6.5% year over year to $1.4 billion. Average revenue per user also jumped by nearly 5% as postpaid subscriber growth was strong.  year over year to $49.95. The firm added over 112,000 postpaid wireless subscribers in Q4. This was above the 91,308 from Q4 of 2015.  Total postpaid subscribers are now at 7,690,727.  Total wireless subscribers came in at 8,468,872, an increase of nearly 3% from last year.

Bell Wireline revenues dropped by nearly 1% year over year to $2.3 billion.  The hardest hit segment was local and access revenue, cascading by 6% to $564 million. Long distance sales were also weak, dropping by over 12%.  At year end, BCE had nearly 3 million TV subscribers, which was flat from last year. It also had 3.4 million high-speed Internet subscribers. This was above expectations and 2% more than last year’s figures. In Q4, Bell Wireline had a slight gain of 18,000 high-speed Internet customers. However, the firm lost nearly 37,000 satellite TV subscribers.  The Bell Media segment had overall revenue of $611 million in Q4.  As for full year 2017, BCE anticipates earnings per share of $3.42-$3.52 Canadian Dollars. This was in line with most analyst expectations.

Earnings per Share 2017 (projected) 2.35
Dividend 2.16
Payout Ratio 91.91%
BCE’s fixed-line business accounts for nearly two-thirds of overall revenue. This portion of the business provides strong cash flow, but measly growth. However, its wireless business is well insulated with just two other major competitors. The wireless and internet businesses, much like their U.S counterparts, are the future growth engines. Even though this has slowed in recent years. Smartphone penetration is lower in Canada than the U.S., so there is room for growth.
Overall its high yield is very attractive in today’s environment. Its steady earnings and dividend are well insulated from market trends. Its growth rate of dividends is meager, but consistent in Canadian dollars. U.S. investors will have a more up-and-down payment due to currency issues. Although not as highly rated as Verizon in the U.S., the stock is an attractive investment for dividend investors seeking low volatility and high yield.
Based on the firm’s above average dividend yield, low beta and financial credit rating, BCE Inc. qualifies as one of our Top 100 Dividend Stocks

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BCE Inc. Dividend Yield Historical Chart (Click to enlarge)

bce

Chart Explanation:  Dividend growth stocks may be viewed undervalued when the current yield is above historical readings for the past 5 years. 

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