Exploring the Sustainability and Growth of BCE Inc's Dividends
BCE Inc (BCE, Financial) recently announced a dividend of $1 per share, payable on 2024-07-15, with the ex-dividend date set for 2024-06-14. 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 provides wireless, broadband, television, and landline phone services in Canada. It is one of the big three national wireless carriers, with over 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 has a media segment, which holds television, radio, and digital media assets. BCE licenses the Canadian rights to movie channels including HBO, Showtime, and Starz.
A Glimpse at BCE Inc's Dividend History
BCE Inc has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. BCE Inc has increased its dividend each year since 2008. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 16 years. 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 8.49% and a 12-month forward dividend yield of 8.59%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, BCE Inc's annual dividend growth rate was 5.10%. Extended to a five-year horizon, this rate stayed the same. And over the past decade, BCE Inc's annual dividends per share growth rate stands at 5.20%. Based on BCE Inc's dividend yield and five-year growth rate, the 5-year yield on cost of BCE Inc stock as of today is approximately 10.89%.
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 2024-03-31, BCE Inc's dividend payout ratio is 1.58, which may suggest that the company's dividend may not be sustainable. BCE Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks BCE Inc's profitability 7 out of 10 as of 2024-03-31, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. BCE Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and BCE Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. BCE Inc's revenue has increased by approximately 2.20% per year on average, a rate that underperforms than approximately 61.37% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, BCE Inc's earnings increased by approximately -5.40% per year on average, a rate that underperforms than approximately 73.65% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -4.50%, which underperforms than approximately 76.44% of global competitors.
Conclusion
BCE Inc's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics present a multifaceted view of the company's financial health. While the dividend growth and yield are attractive, the sustainability of these dividends, given the payout ratio and mixed growth metrics, requires careful consideration. Investors should weigh these factors when making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
