What is the downside risk of BCE from here for the next 1-2 years?
Thanks!
There is always equity risk. Markets could weaken, inflation and interest rates could spike up, BCE could do more acquisitions adding more debt, it could see other operational problems or it could cut its dividend. A stock down 28% (this year) can always go down more. That being said, its yield is now 10.65% and we do not think the dividend will be cut in the short term. Yield buyers should support it up to a point. It is 12X earnings, a fairly low valuation already. The stock is at multi-year low levels. In a market event, we think it could still go to $33 if investors feared more inflation or there were some other shock to the system. But such predictions are largely guesses. If there is no 'new' bad news we would expect some stabilization closer to current levels.