Q: Interesting potential entry point below $35 CAD today. 11.4% yield usually a sign of a dividend cut in the near future. I know the company has communicated that it intends to maintain and not grow the dividend over the next year.
What’s your take on the risk to the share price of a dividend cut at current price levels? Ie. is it mostly priced in here at $35?
What’s your take on the risk to the share price of a dividend cut at current price levels? Ie. is it mostly priced in here at $35?
5i Research Answer:
We think BCE could be in a situation where a dividend cut actually sends shares higher, as they give the market what it wants. We do think some level of a cut is priced in given the yield here but as noted, BCE has been adamant about maintaining the dividend. We are a bit agnostic on it. Sentiment is so bad, we would not be surprised for it get a bit of a bounce heading into year end but on the other hand, there's probably just better opportunities for investors at this stage.