BCE is trading way down in post-Teacher's fallout as disappointed investors avoid it for irrational emotional reasons. This profitable, dominant Canadian telco is becoming leaner, more efficient, more aggressive and more profitable.
New CEO is paring down previous bloat of personnel and management, is sharing infrastructure build costs with Telus, is buying back shares very cheaply, is introducing more competitive pricing, has bought 750 Source store chain (very profitable on its own and will effectively market Bell products and services), has bought rest of Virgin mobile, and appears to have a clear vision to increased profitability.
At current price dividend yeild is 6.4%. With earnings growth and share buybacks the EPS and dividend are going to grow significantly over the next few years. I predict stock price will at the very least double over next 2 years as savvy investors wake up to what is really happening here.
I've been putting every investible cent I have into BCE for several months now. Love everything I read and hear about what new CEO Cope is doing. Transformation from a badly managed to a very well managed company IMHO. Giddeeup!
* The [S&P/TSX Telecom] sector offers an 18-year high dividend yield of 5.9%.
* BCE's yield of 6.42% is now 2.21X that of the S&P/TSX.
If BCE can muster a not unreasonable 1% annual capital gain, then it's total return will exceed the long-run return on equities. With plenty of free cashflow and a low price to book value, we like BCE and continue to buy.
Why telecoms are the place to be Posted: July 17, 2009, 7:10 AM by Jonathan Ratner Telecom, Market Call, yield, quantitative, S&P/TSX Composite The telecom sector has lagged the rest of the S&P/TSX composite by a considerable margin since equities began to rally in March. In fact, it is the only sector to post a negative return in 2009.
While every name in the telecom services sector saw an increase in analyst earnings estimates in June, valuations for the group remain at the low end of their historic range, according to RBC Capital Markets quantitative analyst Chad McAlpine. His model now recommends a considerable overweight in telecoms.
As we enter a seasonably weak period for cyclical equities, the analyst continues to focus on defensive sectors like telecom. Further support comes from the fact that the sector offers an 18-year high dividend yield of 5.9%, which represents a 52% increase year-to-date. This yield is now the highest of any TSX sectors.
RBC’s estimate revisions index for telecoms has seen consistent improvement since October 2008. So if this trend continues, Mr. McAlpine expects to see the level of forecast earnings growth continue to rise.