Assessing the Sustainability of BCE Inc's Upcoming Dividend Payment
BCE Inc (BCE, Financial) recently announced a dividend of $0.97 per share, payable on 2024-01-15, with the ex-dividend date set for 2023-12-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into BCE Inc's dividend performance and assess its sustainability.
What Does BCE Inc Do?
BCE Inc provides wireless, broadband, television, and landline phone services in Canada. It is one of the big three national wireless carriers, with its roughly 10 million customers constituting about 30% of the market. It is also the ILEC (incumbent local exchange carrier—the legacy telephone provider) throughout much of the eastern half of Canada, including in the most populous Canadian provinces: Ontario and Quebec. Additionally, BCE Inc has a media segment, which holds television, radio, and digital media assets. BCE Inc licenses the Canadian rights to movie channels including HBO, Showtime, and Starz. In 2022, the wireline segment made up 52% of total EBITDA, while wireless was 31% and media provided the remainder.
A Glimpse at BCE Inc's Dividend History
BCE Inc has maintained a consistent dividend payment record since 1984, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 2008, earning it the status of a dividend achiever, a distinction awarded to companies with at least 15 consecutive years of dividend increases. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down BCE Inc's Dividend Yield and Growth
As of today, BCE Inc currently has a 12-month trailing dividend yield of 7.09% and a 12-month forward dividend yield of 6.96%, indicating an expectation of slightly decreased dividend payments over the next 12 months. Over the past three years, BCE Inc's annual dividend growth rate was 5.10%, which remained constant over a five-year period. Over the past decade, the annual dividends per share growth rate stands at 5.20%. The 5-year yield on cost for BCE Inc stock is approximately 9.09% as of today.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. As of 2023-09-30, BCE Inc's dividend payout ratio is 1.57, which may raise concerns about the sustainability of the company's dividend. However, BCE Inc's profitability rank is 7 out of 10 as of 2023-09-30, indicating good profitability prospects. The company has consistently reported positive net income for each of the past ten years, reinforcing its strong financial position.
Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must demonstrate robust growth metrics. BCE Inc's growth rank of 7 out of 10 suggests a favorable growth trajectory compared to its competitors. However, BCE Inc's revenue has increased by approximately 0.10% per year on average, which underperforms about 65.52% of global competitors. The company's 3-year EPS growth rate indicates a slight decrease in earnings, underperforming about 61.09% of global competitors. Additionally, the 5-year EBITDA growth rate of -1.50% also underperforms about 66.04% of global competitors.
Next Steps
In conclusion, while BCE Inc's strong dividend history and profitability rank paint a positive picture, the high payout ratio and underwhelming growth metrics suggest caution. Investors should consider the company's ability to sustain its dividend payments in light of the recent growth figures and payout ratio. Additionally, the dividend growth rate, while consistent, may not keep pace with the highest performing stocks in the market. Value investors focused on dividend income may find BCE Inc an interesting case study in balancing yield with growth and sustainability. For those seeking to expand their portfolios with high-dividend yield stocks, GuruFocus Premium offers a High Dividend Yield Screener for more in-depth research and analysis.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
