Monday, March 7, 2011

Dividend Machine BCE, Inc symbol BCE

Income investors can call on Canada Bell, Canada's largest telecom company, to deliver the income. 

We already have one telecom in our dividend machine list and that is At&T. As I have mentioned before, I would love to be able to add Verizon, symbol VZ, but until it actually earns more than it distributes in dividends, it does not meet our criteria.

BCE, like all investments we consider as dividend machines has a strong balance sheet with a D/E (debt to equity) ratio of just .64. Earnings are $2.44 per share and consensus opinions suggest earnings will continue to increase as they have in the past. Increased earnings are critical to an investment that you expect to also increase the dividend payout. BCE has increased dividends every year for at least 5 years. BCE will pay us $.4925 per share on April 15, 2011 provided you own it by March 11, 2011.  BCE closed at $36.43 on March 4, 2011

Every investment has some risk and BCE is not immune from the regulatory environment in Canada. I do not believe the Canadian regulatory environment, as it relates to telecoms, is going to change the earnings and dividend opportunities BCE provides income investors. In addition, BCE has demonstrated an ability to exploit technology.

As income investors we do not just want big dividends we want to be assured that they will increase and that if material events occur, we can sell our position and move onto something else. Over the past 5 years BCE's stock price has increased by 37.29% and that gives me some comfort.

I have looked at other international telecom companies because they all pay big dividends. I have not yet found one that is as consistent an earner nor as consistent a payer of dividends. This company is worth a look for those of you committed to investing some of your portfolio in a cash flow strategy designed to create income.

Very Truly Yours,