Q: EIF: on a TTM period appears to have a lot of debt. and high pay out ratio with low ROE. I was thinking of buying it or BCE (I realize totally different companies). I bought EIF for myself in 2020 - so happy with results and may buy more? Comments please. She owns T in her non-registered account for very long time.
5i Research Answer:
ROE was 12% last year; not great, but OK. Payout ratio (12 months) was 57%, which is very acceptable. Debt is high, at $1.8B, vs $341M cash flow. We think it is a decent buy for income and some growth. BCE will be more stable, and safer, and less interesting overall. We would be comfortable owning EIF but the position size needs to reflect its smaller size and higher cyclicality. We would consider it buyable, but cannot comment on personal position sizes.