Bell the Cash Cow

Bell (BCE) recently announced a dividend increase from $3.33 per share to $3.50 per share ($0.8325 to $0.875 quarterly) this is a 5.1% increase. The first of these increased dividends will be paid on April 15 to shareholders that own the share before March 15th. Bell has paid a dividend since 1983 and has increased their dividend yearly since 2009. Prior to that dividend increases were more sporadic sometimes going a few years between increases. Bell’s net earnings for 2020 increased 28.9% over 2019 to $932 million or $0.98 per common share. 92,928 wireless post-paid customers were added in Q4, while retail Internet additions increased 25% to 44,512 and 12% Internet revenue growth. There were also 21,106 IPTV customer additions in Q4 as well.

The dividend increase is nice and shows that Bell’s business is doing fairly well despite Coronavirus. Bell continues to invest heavily in their fibre optic network in order to stay as the biggest Canadian telecom. To me Bell is not a great stock to buy if you are looking to get a lot of growth; they pay out way too much of their profits in dividends for that. Bell is fantastic as a cash cow though; an over 6% dividend yield yearly provides great cash flow to invest in higher growth stocks while keeping your initial investment fairly safe. They are kind of like the stock version of Berkshire Hathaway’s Sees Candy. It was never a company they were able to grow very much, but it provided them with a lot of cash flow for them to put into higher growth investments over the years. If you are looking for cash flow this could be a good stock to look into buying.

BCE Inc. (BCE) Share price $55.72/ Market Cap $50.39 Billion/ 52 Week Range $46.03-$65.28/ P/E Ratio 22.25/ EPS $2.504/ Dividend $3.50/ Yield 6.28%

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Bell Canada is a Canadian Telecommunication company headquartered in Montreal, Quebec. They are an Incumbent Local Exchange Carrier in Ontario and Quebec and were a founding member of the Stentor Alliance. Bell is also a Competitive Local Exchange Carrier for enterprise customers in the western Provinces. Its subsidiary Bell Aliant provides services in the Atlantic Provinces. Bell’s services are provided through Bell Mobility (Vision Mobile and Lucky Mobile), Bell Satellite TV (direct broadcast Satellite), and Bell Fire TV (IPTV).

BCE Inc. aside from owning Bell Canada also owns Bell Media, which operates mass media properties including CTV as well as having significant interests in the Montreal Canadiens and Maple Leaf Sports & Entertainment (which owns several Toronto Professional sports franchises).

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Disclaimer: I am currently long on BCE. All share prices are as of February 18, 2021.

Published by Colby McTavish

I am a Third year Heavy Equipment Technician. I also have a diploma in business management from MacEwan university. I have 2 children. In my spare time I race stock cars, play ball hockey, trade stocks and work on vehicles when I am not hanging out with my kids and my other half.

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