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BCE is my stock pick in Canadian telcos, this investor says


It’s been a relative high-flyer for over a year now but investors can still take comfort in owning BCE (BCE Stock Quote, Charts, News, Analysts, Financials TSX:BCE). That’s according to portfolio manager Michael Sprung of Sprung Investment Management, who sees BCE as just about the best of the bunch in Canadian telecom stocks.

“I still like BCE within the telecom sector,” said Sprung, speaking on BNN Bloomberg on Wednesday where he spoke of recommending BCE one year earlier on a Top Picks segment. “It’s Canada’s predominant player, although Telus is not too far away. I like both companies.”

“If anything, I think that I would continue to hold BCE. It still has a yield that’s approaching five per cent. It is a little bit more expensive certainly than it was when I initially recommended it [one year ago], but again, I consider BCE to be a core holding,” he said.

BCE had trouble over the first half of the pandemic but the stock picked it up in 2021 and has continued its upward trend this year, trading up about seven per cent year-to-date and up 22 per cent for the past 12 months. BCE also comes with a dividend yield currently at 5.2 per cent.

“I think they’re doing very well in terms of their placement of fibre and their ability to reach homes and so on,” said Sprung. “They rank amongst the top in Canada and I think they will continue to be a predominant player in the Canadian market.”

Ahead of BCE’s first quarter financials due next week, the company last reported in February where management announced fourth quarter 2021 earnings and announced a 5.1 per cent dividend increase, bringing its quarterly payout to $0.92 per share. The Q4 saw its revenue rise by almost two per cent to $6.2 billion while net profit dropped 29 per cent to $658 million. 

The company’s Bell Media segment did better on a year-over-year basis, with revenue up seven per cent to $849 million, including a 36 per cent jump from digital revenue. Wireless revenue was up almost three per cent to $2.475 billion with service revenue doing better than products, which had lower year-over-year revenue. Bell added 109,726 total net new postpaid and prepaid mobile subscribers, which was a big jump of 76 per cent over a year previous, while its total mobile phone customer base was up 3.2 per cent to 9.5 million.

BCE touted its infrastructure build-out in 2021 and pointed to more capex investment this year. Management guided for revenue growth of between one and five per cent for 2022, adjusted EBITDA growth of between two and five per cent and for adjusted EPS growth between two and seven per cent.

“As we look ahead to 2022, we plan to reach up to 900,000 more homes and businesses with direct fibre connections and expand the reach of our 5G network to meet our growing customer needs. And in every interaction, we will continue to build on the gains we made in making it easier for our customers to do business with us, and keep them at the centre of everything we do,” said President and CEO Mirko Bibic in a February 3 press release.

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