BCE Inc. (BCE.TO)

Doesn't own, mainly because of debt levels. Has tended to increase dividend over time, all the time, combined with high levels of capital spending. Rogers deal announced today involves selling a prize asset, but only a 10% reduction in debt. Dividend safer today than yesterday.

He wouldn't buy it but also wouldn't sell it. It pays an 8.6% dividend and he sees no dividend issues going forward. They need to have continued asset sales for the next few quarters and effective pricing.

Dividend's OK, and lower interest rates should give the stock a big bounce. Problem is that everyone who wants a cellphone already has one. No market growth. How can they improve their business? Pricing is high, government pressure to bring it down. Have to keep reinvesting capital to keep up with competitors, who all have the same problem. Yield is 8.5%.

The only interesting play in the space is QBR.B.

It is lowering its capital expenditures by about $1 billion mostly this year, and lowering operating expenditures. This will improve free cash flow. This is looking favorable for lowering the payout ratio and sustaining the dividend. It is sensitive to interest rates and has probably hit bottom. In general the 5G and other expenditures in the telecoms are being wound down so free cash flow is improving.

He owns it to his chagrin. BCE's problem is their cost structure, spending a lot on 5G, and they face competitor pressure, and BCE needs to rationalize some of their media businesses (how will they grow them?). They pay a high dividend, though it's sustainable, but they need to right-size their debt and sell non-core assets.

Future is good. It and other telcos have been a painful hold this year. Most buy it for the extremely strong dividend, and that's sound. Rough waters, but we're coming out of it. Competition aspects that have dragged down telcos are coming to an end. Medium-term outlook still positive. He's been adding exposure on weakness.

Large cap, blue chip. Strong balance sheet with strong penetration in the market. Though no dividend is 100% guaranteed "safe", he wouldn't stay up at night worrying about this one.

Fundamentals have been sloppy and there's growing competition. They're spending more on capex which hits cash flow. Pays a 8.5% dividend though there are fears of a cut; he doubts that. Valuation is at the low end historically while free cash flows are growing. Will benefit from AI integration. Be a little patient and collect the dividend as you wait.

We would be fine with an 'accumulation' buy of BCE for income. The stock should be able to perform better in a lower interest rate environment. 
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In the TSX 60 index, has come up a bit in RSI rankings from #60, tied with Rogers at #55. Telecom, in general, has struggled for quite some time. Chart's broken out of a downtrend, nice pickup above $45. Took out $47.50, would look great if it breaks $49.50-50 (first resistance), but still in his red zone (the lower half).

Looking more encouraging now that it's started to climb up off the bottom.

Earnings today, numbers weren't bad, well-needed relief. Not raising dividend, as balance sheet's really been an issue. Duking it out with competitors; this may have reached an inflection point in terms of pricing and negativity, but will take a couple of quarters to show up. Asset sales, reducing headcount. 

All eyes are on telecoms and regulators right now for roaming and wholesale rates. If there's a positive outcome there, plus lower interest rates, then BCE has more to go.

Canadian telcos are an interesting space. He's been cutting his positions in them over several months, mainly because competitive intensity is remaining quite high. Dominant, but is the payout ratio sustainable? Will the price war abate?

He's cautious. Step away for now. A better time to buy would be when you no longer get those text offers of extra data for only $5 more.

Telecom's the only sector that's done worse than REITs this year. Headwinds of competition, interest rate sensitivity, dividend. Doesn't think dividend will be cut, lots of levers it can pull. If you own it for yield (and it's tax-efficient yield), you'll be OK. Yield is in 7.5-8% range.

Not a bad place to be as interest rates are decreasing. May not get a lot of dividend hikes over the next few years. If you want long-term capital appreciation, not an area he'd focus on. Sometimes it's worth it to sell, take the tax loss, and recycle the proceeds somewhere else to make money (into REITs, for example).

The board must be considering this with the payout ratio above 100%. But if BCE cuts the dividend at a modest 15-20%, there might be a positive move in the share price, perhaps not initially, because investors want this. Their subscriptions may be down, but the sell-off of shares is overdone. If BCE does cut, the knee-jerk reaction may be a sell-off, and that's when he might pick away at it.

Chart looks interesting. Early stages, but looks as though it's successfully retested support at $31.50 USD from April and early July. Getting towards the top of its $31-34 trading range. So far, so good. Long-term underperformer, near bottom of his Canadian RSI large-cap rankings. 

Technically quite encouraging if it was able to break out above $34.
(Note prices in USD.)

Downward slope since April 2022. Value score of 9/10 is attractive, but wait to see a turnaround. Telcos and utilities should start to do better once interest rates come down. Late 2024 or early 2025 may be promising. Dividend of ~8.8% safe. If you own it, she and the street say Hold.