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  5. BCE: 5i Research has been always positive about BCE and its high yield as manageable and the Management is doing a good job through challenging times. [BCE Inc.]
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Q: 5i Research has been always positive about BCE and its high yield as manageable and the Management is doing a good job through challenging times. BCE bonds last week were rated at just 2 notches above junk by Moody & S&P Globe ratings. I am wandering if you can justify your optimism in this light of downgrading. If so please provide reason for your optimism.
Asked by Ritwik on September 04, 2024
5i Research Answer:

Bond rating agencies only look at bond quality, and do not look at stock valuations, really. We would not really say we are that positive on the stock, only that the low valuation and high valuation reflect the risks well. There is concern on the dividend from investors, but we do not think it will be cut. We could of course be wrong, but the company has instituted a cost-savings plan, and can sell assets if it wants to. BCE did not cut its dividend in other times of crisis, and we are not even in such a crisis scenario now. The company has cash flow, assets, earnings, and, likely most important, time. Sentiment is so very negative that any positive news could have an amplified impact on the stock. It's not perfect, and not risk-free, but just priced right to reflect this.