Q: BCE dividend payout ratio is 120% and Telus is not far behind. How is this sustainable? Isn't this a warning sign?
5i Research Answer:
Because earnings include lots of non-cash charges, we prefer to look at dividends in relation to cash flow. Cash is what is needed to pay dividends. On a cash flow basis, BCE's payout ratio in 2022 was 41%. Telus was 25%. We would consider these to be among the most sustainable dividends in Canada. Telus raised its dividend this morning.