Q: We always heard Buy Low Sell high. Will this apply to these two companies , being at their 5 yr. low? If they were to cut their dividend by 30%, their dividend will still be 4% +, and the price will drop even further. Would then be another time to scoop up some more?
5i Research Answer:
It is difficult to predict what might happen and more difficult to predict a price reaction to whatever happens. Sentiment right now is very low, but valuations are as well. We do not expect dividend cuts here, but of course could be wrong. If there was a cut, we would need to see the stock reaction to decide whether that was a buy signal or not. Generally, we prefer to avoid companies that have cut their dividend, as the first cut is not usually the last. We think BCE and T can be owned for income today, but patience is going to be required. But sometimes, when sentiment is so bad, ANY good news can have an amplified positive impact on share prices.