What is your insight for RCI.B looking forward ? Hold, sell or buy?
Any comments on the sustainability of the dividend will be appreciated.
Thanks again for your valuable comments.
The average target is now $52.88, 46% higher than the current price. Analysts tend to lean to the conservative side of things, so some adjustments are not surprising. We do not think anyone really expects the stock to rise 46% in the next year. The dividend seems secure to us. Based off operating cash flow, 2024's payout ratio was 13%. Even against free cash flow the ratio was well below 50%. Still, the dividend has not been increased in more than six years. The company had planned to reduce debt, but we note debt has more than doubled since 2021. It is spending more money on acquisitions than expected. EPS is expected to show a nice gain this year, with much more muted growth in 2026. The stock is very cheap, at 7X earnings, but has been hit hard, down 18% YTD. Sector sentiment towards the stock is horrible. Both BCE and T are outperforming it this year. It did beat earnings estimates in the last quarter. All in, it is not exciting in any way, but priced well. We would rank it a HOLD at current prices, and might become buyers if it were to see much further declines. But we would see it as an Income, not a growth, stock.