Stockchase Insights BCE Inc. BCE-T HOLD Mar 10, 2025

Hurt by pricing, competition, and CRTC rulings. Tailwinds from immigration have changed. Intensive capex with higher interest rates. Needs to sell assets and towers (and lease them back). Dividend is too high. Compelling down here. 

In registered accounts, he's held on. In non-registered, he sold in November for the loss, and then got back in after the 30 days passed. You'll be fine longer term.

He owns no telcos. Lots of competition, regulation uncertainty, lots of debt. Should cut dividend. Likes companies with high free cashflow to grow the business.

When he chose this last year, he was looking for a bounce. Which did happen, but then everything came unglued. Regulators, competition, and payout ratio is too high. In a downward channel on book value. Earnings are also in a downward channel. FMV has lots of upside potential, but that's the only bright spot. Be cautious here.

Recently added a bit to his position. BUT: do not buy it for the current dividend yield. Management maintaining dividend for 2025, but Lorne strongly believes it will be cut in 2026 and he wants that cut. Generates lots of FCF, but lots has been going to the dividend. He'd much rather the FCF be used to pay down debt and invest in its business.

In his early days, someone said to him that when you see a high dividend like this one, "The dividend is talking to you." If the dividend were cut, the stock might actually pop a bit, as it would demonstrate management's focus on reinvigorating the business.

Dividend seems likely to be ratcheted back to get cashflow back up. Challenging time for most telecom stocks. Earnings will be challenged for this name, because of types of businesses it's in. He wants growth.

Telco sector sees steady demand keeping it defensive, but not a growth rocket. Facing stiff competition, regulatory issues, underperforming the sector index. Cost-cutting and asset sales. Cheap. Juicy yield of 8.5%. If you're in it for the yield, and you can stomach the volatility, cost cuts could pay off in the long run.

The most-hated stock in the past year. Everyone expects them to cut their dividend, which is under review now. The worst is probably over. It remains a regulated utility with good cash flow, which is what investors want in this market now. So, BCE can do well by default. It doesn't take much good news or rate cuts to lift this stock.

At these levels, this whole area is a buy. Needs to cut dividend, but that could actually be a catalyst for the stock.

Yield is about 12.2% right now, with talk of a cut; she thinks chance of that is greater than 50%. Institutional investors want the cut, retail investors don't. If cut, stock price would probably go up. If you have a very long time horizon, thinks you can do well. Likes its critical infrastructure.

Was doing a bit better this year, but then came off again. Stock may have reached a bottom. A bit further behind Telus in the buildout of fibre to the home. Telus announced potential sale of towers; if BCE were to do that, dividend wouldn't necessarily need to be cut.