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There have been quite a few major moves made by companies over the last year. And those moves continue, even as it looks like the TSX today might be improving. But among all the companies trying to find ways of making more or saving more money, one that investors should watch is dividend stock BCE (TSX:BCE).
BCE stock could be one of the best deals on the TSX today, with a huge track record of growth that goes back decades on the market and over 100 years as a business. Let’s look at why you should pick it up right now.
Earnings growth
During the most recent earnings report, analysts reconfirmed that BCE stock is one that’s set to outperform over the next year. The company’s earnings report was full of fairly good news. And yet, management continued to focus on how the company can prepare for the future.
The dividend stock saw adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rise by 3.1% year over year. In fact, its adjusted EBITDA margin came in at 43.9%, the best result since the second quarter of 2022.
Now, it wasn’t all growth; net earnings were down 8.3% to $707 million, with earnings per share down 8% as well from higher interest expenses and income taxes. Cash flow fell by 1.8%, but there is a higher growth trajectory for 2023 in the quarterly budget, increasing 17.4%. Meanwhile, the company achieved the second-best ever results for its quarter in subscriber activations. Further, it achieved record quarter for fibre internet net activations, up 7.9%.
CRTC decision: Help or hurt?
The results, although not strong across the board, still allowed BCE stock to reconfirm all its 2023 financial guidance targets. This continued to be the case, but even so, the dividend stock came out with some news shortly after earnings reports.
BCE stock has been against a recent Canadian Radio-television and Telecommunications Commission (CRTC) decision. This decision stated that it hoped to increase competition and allow for a fair marketplace by allowing third-party companies access to fibre-to-the-premises networks. In recent years, larger telecommunication companies have taken over with declining competition in the industry.
In response, BCE stock stated it would be cutting back on investments in certain areas of the market. Capital expenditures would fall by $1 billion for both 2024 and 2025. The company had planned to invest across Canada, planning to achieve nine million locations, up from seven million by the end of 2025. However, it’s now aiming for 8.3 million from the decision.
Market overreacts
After the CRTC decision, coupled with a potential merger in the market, BCE stock has fallen a fair amount. However, it now looks to be a great deal for investors looking to get in on a great dividend stock.
While BCE stock may be down now, dealing with competition at the moment, it’s been here for decades, as mentioned. This company isn’t going anywhere. In fact, it’s now a huge steal based on long-term growth and current fundamentals.
Shares now trade at 22.2 times earnings, with a dividend yield of 7.14% as of writing. That’s far higher than its five-year average of 5.65%. Further, shares are down 14.5% in the last year as of writing, making it a great time to grab hold — especially since shares have climbed by 20% in the last decade, even among all this volatility. So, certainly consider this dividend stock today.
