BCE (TSX:BCE) Ups Dividend! Is This Income Stock A Buy?

Summary

  • Early on Thursday, BCE Inc (TSX: BCE) reported a 28.9 per cent year-over-year (YoY) increase in its net earnings of C$ 932 million for Q4 2020.
  • Its common share dividend is also up 5.1 per cent to C$ 0.875, payable on April 15.
  • BCE’s revenue from operation in Q4 2020 dwindled by 2.8 per cent YoY to a sum of C$ 6,102 million.

 

Canadian communications company BCE Inc (TSX: BCE) has just announced its latest financials and it reflects a surge in its fourth quarter profits as well as its quarterly dividends.

Early on Thursday, February 4, the telecom giant reported a 28.9 per cent year-over-year (YoY) increase in its net earnings of C$ 932 million for Q4 2020, along with a 5.1 per cent increase in its common share dividend.

With the latest surge, the company has increased its quarterly dividend from C$ 0.833 to C$ 0.875 per share.

BCE has also kept aside a billion-dollar package (in the range of C$1 billion to C$ 1.2 billion) for additional spending, part of which it plans to shell out for the expansion of its next-generation 5G network over the next two years.

 

BCE Inc’s (TSX:BCE) Latest Financials

 

BCE’s operating revenue for the fourth quarter of 2020 dwindled by 2.8 per cent YoY to a sum of C$ 6,102 million, a decline the company has blamed on COVID-triggered drop in wireless product sales roaming volumes and customer spending.

The Montreal-headquartered enterprise also registered YoY declines of 2.8 per cent and 2.7 per cent in its service and product revenue for Q4 2020, respectively.

For the whole year of 2020, BCE’s operating revenue had weakened by 3.8 per cent to C$ 22,883 million.

©Kalkine Group 2021

 

BCE’s increased net earnings were motored by the hike in Bell data centres’ sale to Equinix in the fourth quarter, as well as some reduced impairment charges and income taxes.

On an annual level, however, the telecom company saw a 17 per cent YoY drop in its net earnings of C$ 2,699 million in 2020.

 

What About BCE’s Stock Performance?


As markets opened on Thursday following its financial report release, BCE stocks were up by roughly a per cent at the time of writing this (10AM EST). Currently priced at C$ 55.73, the stocks gained nearly three per cent in the first four days of February .

The BCE shares come with a price-to-book ratio of 3.014, a price-to-cash flow ratio of 6 and a debt-to-equity ratio of 1.66. Its return on equity, on the other hand, stands at 13.03 per cent, as per TMX data.

The company has rewarded its shareholders with an increase in dividends. With earnings per share at C$2.52, BCE stock is an attractive proposition for investors looking at income stocks. However, the telecom giant’s future depends on the largescale rollout of 5G and the macroeconomic situation.

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