BCE Inc. (BCE.TO)

The worst Canadian telco. Revenue growth has slowed to 1.5%. So has dividend growth, though the free cash flow can sustain the near-9% dividend. There are layoffs now and coming.

Using BCE as an example, its growth has decelerated, volume growth consumes a large amount of capital, while pricing power is limited in the industry. But, Canada remains an oligopoly with little real competition, and largely, we do not believe its dividend is at any real risk in the medium term. One of the issues has been a combination of slowing growth, mixed with lower free cash flows relative to its dividend payments, resulting in increased borrowing at currently high rates. While a 5% interest rate may not seem objectively high, when considering the levels these companies were borrowing before, the rate of change is extremely high, and this is what impacts a company's bottom line. 

We would like to see BCE and other telcos tighten up on spending and begin to improve their margins to fully secure current dividend payments, but debt levels have been rising and this has led to some concerns by investors. We do not like the negative momentum of the name, but we believe a lot of worries have been priced into the name and we feel it can be slowly accumulated by income investors with a long-term timeframe. 
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Often when you see a stock with an 8+% dividend yield, you think value trap. Paying out more in dividends than it's earning, still secure. Large restructuring. Thinks by 2025 will be covering dividend again. Even if the stock never goes up, you're getting an over 8% return, and that's pretty decent. Revenue stream is evolving; management has been aggressive in a tough environment and is dealing with it.

Cautions the "senior senior" to have a diversified portfolio. Don't plow all your money into any stock. 

Not as much leverage on the balance sheet as peers. Shares have contracted to a very attractive valuation, plus a 9% yield. He'd choose BCE at this point.

Telus usually trades at a premium to peers due to higher growth and further ahead in fibre to the home. Should benefit from immigration. Most diversified of the Big 3.

A contrarian theme, instead of chasing large US tech stocks. "Be greedy when others are fearful." Strong brand. A conservative investment. Long-life, high-quality assets. Great recurring revenue. Better balance sheet than some peers, fewer service outages, a more stable management team. Trades below market average at 14x PE. Yield is 9%.

Shares have traded down due to: interest-rate sensitivity and competition with higher bond returns, sector competition, regulatory challenges.

See his article in the Financial Post or on the goodreid.com blog.

He is seeing a bottom now at $44 and if it gets below that then sell. He doesn't see a lot of upside, maybe $48. It has issues such as interest rates and debt concerns.

Favours Telus for the long run. More consistent performer for dividend growth. Share price over 10 years has been steadier. (He's based in Western Canada, so he may have a bit of a home-team bias ;)

But if he had to buy one today, he'd go with BCE. Trading at a 10-year low, appears oversold. Yield is about 8.5%, and looks secure -- reducing capex, and it could introduce a discount to its DRIP program (which would give it a healthier payout ratio).

Holds it for client income, attractive yield over 8%. Going to wait it out. Thinks dividend safe. Not generating sufficient cashflow to pay for dividend, but company hasn't kept that a secret. Aware of shareholder base, adamant that dividend would be maintained. Eventually capex will go down, and will grow into payout ratio. Selling some assets. Rate cuts would be a tailwind.

Wireless competition has ramped up, but not cutthroat price wars. Immigration increases demand.

He sold. Stuck in the mud. High debt, high payout ratio. Still in capital expenditure cycle. Divestitures, not sure if it's enough to move the needle. Should be able to maintain dividend and muddle through, but needs to cut costs significantly. Negative growth guidance last quarter. Jury's out.

Much prefers Telus and QBR.B. 

It has an 8 1/2 to 9% yield. Although not a growth company you could hold it forever. Its Capex in building fiber to homes should come down - after a few more years of higher Capex, debt can be reduced. It is a good defensive stock.

Has been buying shares lately. Weakness in share price a good time to buy. Believes company has a path to growth. Narrative that company is borrowing to pay dividend is false. Fiber optic build is going well - very long term asset. Doesn't think capital projects are unreasonable. 

Disaster. It was in his income platform, so he forgave the pullback. But then it took a dive. Could bounce back to $50-51. He wouldn't be a long-term buyer. Look to get out. 

Earnings expected to be flat. No growth in business. Dividend appears to be safe - but no growth. Would not recommend investing in this business. Better names available for investors in the market. CNQ offers much better dividend for investors. 

ALA trades at 12x earnings, growing at 12%. On PEG ratio, it's cheaper. Yield is 4%, growing comfortably at 5-8%.

BCE is paying a wonderful dividend. PE is more expensive. No growth right now, perhaps will see 3% in a couple of years. At $47, still a bit of upside from today's levels. Regulatory announcements have to go well for BCE, still pricing issues, still a bit of wood to chop.

For fresh money, ideally split it between both. If he had to choose one, it would be ALA. 

Getting rained on, along with the rest of the telcos. Yields between 8.5-9%, secure. Probably have seen the worst in the sector. Still has growth. Cord-cutting, but internet usage is rising. Cell phone use will continue to grow. Buy here, collect dividend, interest will return when rates come down and share price will bump.

He'd favour stopping dividend increases, and putting more money toward paying down debt.