BCE is a great fit for the current interest rate environment, this portfolio manager says

Investors have been rewarded by BCE (BCE Stock Quote, Chart TSX:BCE) over the past few months, with the stock up almost 15 per cent since last October. And as long as interest rates stay low those good times will likely keep on rolling, says Chris Stuchberry of Wellington-Altus Private Wealth.

“[BCE] has been doing quite well since the third quarter of last year and that’s when interests rates sort of stopped dead going up and all the utility-style investments really did quite well,” Stuchberry told BNN Bloomberg on Thursday. “If you have a belief that this is going to continue that interest rates won’t go up then you could do quite well by owning some BCE in here.”

“It does have higher leverage but it has always had higher leverage,” he says. “It’s got a stable business and you’re not going to worry too much with the dividend — maybe miss a dividend hike if things really got a bit messy, but that’s a good backdrop. I think you’re just fine owning a BCE.”

Last week, the Bank of Canada announced that there’d be no change to its benchmark interest rate of 1.75 per cent, indicating that a slowdown in the economy has been more pronounced than anticipated. TD Securities reported that it’s likely interest rates will not rise through all of 2019 and 2020, with the trimming of rates also a possibility. The last time the BoC raised rates was last October.

While all of Canada’s major telecom companies have faired well in recent months, BCE’s gains are significant in that it took longer than the rest to recover from a weak period which began late in 2017 at a time when interest rates were on the move. BCE ended 2018 down 10.7 per cent.

Last month, BCE reported its fourth quarter and year end financials for 2018, which featured a consensus beat on earnings for Q4 as well as a three per cent year-over-year rise in revenues to $6.215 billion.