BCE Inc. (TSX:BCE)(NYSE:BCE) has been on a rough start to 2018 with its share price down more than 9% in the first three months of trading. A welcome side effect of that is that the company’s dividend is now yielding 5.4% and investors can expect that to grow over the years.
Currently, distributions are $0.755 a share every quarter, and that is up 30% from five years ago, for a compounded annual growth rate of over 5%.
Pessimism in media stocks has led to a sell-off of not just BCE, but many of its peers in the industry as well. The stock may be down, but investors shouldn’t expect that trend to continue for much longer. BCE has a strong position in the industry and there is still a lot of room for the company to grow.
In its most recent quarter, the company’s sales were up over 4% although profits were down year-over-year. BCE has consistently been able to grow its top line while also creating value for its shareholders.
A good quarter next month could send the stock up again in price and the dividend yield could diminish quickly, so investors may want to buy up BCE before the next earnings report.
Although the stock is a little expensive with a price-to-earnings ratio of 18 and the share price trading at more than three times its book value, this is typical for BCE, and that’s why earnings will typically dictate where its share price will fall. However, the stock offers a lot of stability and investors shouldn’t expect big swings on earnings day in either direction.
