-
Bank of Nova Scotia (The) (BNS)
-
BCE Inc. (BCE)
-
TELUS Corporation (T)
-
Pembina Pipeline Corporation (PPL)
Q: BCE has given up much of its post-dividend-cut rally - not to say that the cut was a bad idea, and maybe there's a support level lurking somewhere here. At the same time, I find myself wondering just what BCE's value proposition could be, now, to make it more attractive than T (or, for that matter, BNS or PPL, which offer similar yields)? Put another way: if investors have no reason to buy BCE other than income, and if declining interest rates are the only meaningful catalyst for share price appreciation, then, post-cut, isn't it at least as likely that it will continue to decline?
5i Research Answer:
We would consider all of PPL, BNS and T to be 'better' than BCE in terms of overall returns. But, BCE could still do well if it is successful in its cost-cutting efforts (better earnings) or growth initiatives. A simple sentiment change could see the stock move sharply (10X earnings to 12X earnings would of course imply a 20% move). But the stock is now once again down on the year (9.3%) and we certainly would not expect miracles here.