Santa Claus BCE Inc. BCE-T HOLD Dec 24, 2008

He actually likes both. Looking at price action over the last few days, these names have held up rather well. Sector's bottomed out. Both names have high dividend yields, tremendous FCF, lots of opportunity going forward to buy back stock. Worst is over for the sector, phenomenal opportunity.

With BCE, you should anticipate a dividend cut; this would be fine with him, as it will free up $$ to reduce debt and possibly buy back stock. If that happens, it would be a positive rather than causing the bottom to fall out of the stock. Investment community wants it to cut the dividend, reduce debt, and undertake a better allocation strategy. Still throwing off significant cashflow. Too early to say if it overpaid for the Ziply acquisition.

Telus has done better, with better growth. Invested in other things to diversify its business. 

Dirt cheap. Multiple is ~10-10.5x PE. Market's lost confidence. FCF generated is roughly in line with the dividend, but looks undercovered relative to earnings. If dividend were to get cut, would be a positive catalyst. US acquisition will suck cashflow.

People own it for the dividend, not for growth. Cash cow. If management retrenches, there's a path to getting a better multiple. Very little downside. Buy here if you want income.

Troubled. The business is becoming more and more competitive. Can't cover the dividend. Company claims that when massive fibre build is complete, dividend will be covered; most investors don't believe that. If dividend were cut, stock would go up. Yield is 12%.

He's a more aggressive investor than the rest of his team. He'd say it's a speculative buy now; BCE is not going away.

Relatively high yield. Defensive sector. Elevated payout ratio, rising debt, and weak growth outlook present too many risks. Hasn't done that poorly this year. 12-month price target of $34.75. If you're concerned, you could sell 1/4 or 1/3 as a sacrificial lamb.

Challenged sector for several years, mainly since interest rates started rising. Bond proxies that are pretty compelling when there's financial repression as we had from 2008-2022. You have to pick your spots. Likes Telus, but not the rest.

Pretty much a certainty that BCE will cut its dividend; it's more a question of when and by how much. Yield is now up to 13%; a screaming red flag from the market telling you that dividend is not sustainable. 

Most people want to diversify. Temptation is there -- fat dividend, company will be around for years and years. He expects a dividend cut of 50-55%, DRIP may be stopped, more asset sales. Balance sheet and population growth have not been in its favour. Buy only a little bit down here ~$29.

His view is that if BCE starts aggressive measures to right the ship, the stock will actually rally.

Everybody has baked in a 50% dividend cut, but you will still receive a pretty good yield. Long term, the fundamentals work for the telcos, but this could take a yield. Meanwhile, collect the dividends.

No issue with defaulting on bonds from any of the big 3 telcos. For the equity side: not a lot of growth, price competition, CRTC always making new rules. 

Cashflow does not cover dividend, and that's why there's talk of cutting it. Personally, he feels they'll never cut it, since most people who own it are looking for dividends. Better opportunities elsewhere.

7% in one stock is way too overweight. Expects to see a haircut on the dividend. Management hasn't been making the best decisions over the last year or two. He's been in this name since mid-$40s, not happy, but hasn't exited.

Instead, use ZWU.