At nearly 9%, BCE’s dividend yield continues to be attractive and food for thought.
Posted at 1:18 a.m.
Updated at 7:00 a.m.
If the recent sale of stakes in Maple Leaf Sports & Entertainment for $4.1 billion was the right move to reduce the Montreal telecommunications company’s debt, Scotia analyst Maher Yaghi continues to believe that BCE is not expected to increase its dividend in February.
“Companies should not rely on the sale of non-core assets to finance dividend enhancements. Dividend growth should only be linked to sustainable organic earnings growth, net of capital expenditures,” he says in a report sent to clients earlier this week.
Instead of increasing its dividend, BCE should, according to him, set up a dividend reinvestment plan at a reduced price, like what Telusand wait until 2027 to restart dividend growth.
In the eyes of this expert, it is essential to reduce dependence on debt to finance the dividend, given the still high interest rate environment. Maher Yaghi believes that BCE must demonstrate its desire to clean up its balance sheet in order to protect itself against potentially more draconian actions in the future.
TD continues to recommend that investors adopt a cautious approach towards the Montreal tour operator Deckchair until there is greater clarity around a long-term sustainable capital structure providing greater upside potential for shareholders. In a note sent this week to his clients, analyst Vince Valentini argues that it is increasingly possible that the value of Transat’s stock could later reflect a zero value depending on how management manages to agree with its creditors to refinance the company’s debt. None of the five analysts officially following Transat recommend buying the stock.
A member of the board of directors of Dollarama sold just over $275,000 worth of shares of the Montreal retailer mid-week. Huw Thomas sold a lot of 2,000 shares on Wednesday at a unit price of $137.73. He has been a member of the council for 13 years. He still has 6,000 Dollarama shares left in his account. Dollarama’s stock is at an all-time high.
BCE lost the support of National Bank Financial at the start of the week. Analyst Adam Shine withdrew his buy recommendation on Monday on the stock of the Montreal telecommunications services provider. This expert fears disappointment when the next quarterly results are published on November 7. “The consensus is too high,” he emphasizes. Only 2 analysts out of 18 now recommend buying the stock.
TD highlighted earlier this week that Bombardier is among its best investment ideas in the country. Analyst Tim James believes a revaluation is warranted given the significant operational and financial progress made, expectations surrounding continued deleveraging, and revenue diversification. The upcoming catalysts according to him are an upward revision of the forecasts for 2024 or the objectives for 2025, the recognition by the market of previous financial results and the potential for future profits, deleveraging, as well as a reduction in the volatility of the economic cycle for business jets which could lead the market to assign a higher valuation multiple to Bombardier.
The investments of US 200 million announced this week by Lassonde to build a new beverage manufacturing plant in New Jersey will improve the profitability of the Rougemont company’s American operations, according to portfolio manager Philippe Hynes of the Montreal firm Tonus Capital.
“If we assume a return on investment of 10%, and I even hope it will be much higher than that, American profit margins would increase by 1.5%,” he says. “And what is especially interesting is that management has shown since the start of the year that the American margin recovery plan (Eagle plan) is working. As an investor, I am therefore much more comfortable with them investing 200 million US dollars. »
Since the company generates significant cash flow, executives won’t need to put the bottom line at risk to build the new plant, he adds. Philippe Hynes says he expects profit growth above 10% in 2025 and believes that investors will gradually assign a higher valuation multiple to Lassonde.
Quebec titles of Savaria, Bombardier, Dollarama, Transcontinental, Power Corporation, Cogeco Communications, Quebecor, WSP et iA Financial Group all hit a 52-week high this week on the Toronto Stock Exchange.
On the other hand, that of the manufacturer of recreational vehicles BRP reached its lowest level in the last 52 weeks this week.
