Buy and hold BCE in 2019, this investor says

Investors should be pleased with Canadian telecom company BCE (BCE Stock Quote, Chart TSX:BCE), which has been on the move since the start of the year. But for those of us wanting to get in on the action, waiting for a pullback is probably a good idea, says Bruce Campbell of Campbell, Lee & Ross.

The US Federal Reserve on Wednesday announced that there’d be no change to its key interest rate, leaving it within the current range of 2.25 to 2.5 per cent. The Fed went further by stating that it expects no further rate hikes this year, with only one quarter-point increase expected next year and none for 2021.

The announcement follows on the Bank of Canada’s decision a couple of weeks ago to keep its benchmark rate at 1.75 per cent, with both the BoC and the Fed citing a slowdown in the domestic and global economies as the culprit.

That’s good news for dividend-supplying stocks like the utilities, which were faring more poorly last year when interest rates were on the move but have since bounced back in 2019. For its part, BCE is now up 9.4 per cent year-to-date after finishing 2018 down 10.7 per cent.

Campbell says that BCE is a nice long-term stock to own.

“We like BCE and own it,” says Campbell, in conversation with BNN Bloomberg on Tuesday. “In a way, it’s like Telus with a little more safety and a little less growth. I think it’s a fairly sure five per cent-ish dividend. They’ve been really good at finding avenues to grow by two, three, four per cent, which I think is about as much as you could get.”

“They had a revaluation and it has come up nicely over the last six months,” he says. “For an entry point, I’d wait for a dollar or two lower. If you could do $56 or $57, that’s better. Hold it if you own it; the long-term horizon will be okay now.”

BCE last reported its earnings on February 7 where its fourth quarter featured a three per cent year-over-year growth in revenues to $6.215 billion and EPS of $0.89 per share, beating the consensus estimate of $0.86 per share.