Canada’s BCE Inc. (BCE), the parent company of Bell Media, has cut its quarterly dividend payment to shareholders by 56% despite reporting that its first-quarter profit rose.
The Montreal-based telecommunications firm says it will now pay a quarterly dividend of 43.75 cents per share, down 56% from 99.75 cents a share previously. BCE stock, until now, had a dividend yield of 13.58%, one of the highest payout ratios of any publicly traded company.
The high dividend yield made BCE stock a favorite among retirees and investors who are seeking income generation. BCE CEO Mirko Bibic said the dividend cut is necessary as the company faces intense price competition and ongoing geopolitical instability and macroeconomic uncertainty.
Decent Results
News of the dividend cut comes as BCE reported decent first-quarter financial results. The media company announced earnings per share of $0.68, up 55% from $0.44 a year earlier. Revenue in the year’s first quarter totaled $5.93 billion, down 1% from $6.01 billion generated a year ago.
Despite its previous hefty distribution to shareholders, BCE stock has struggled in recent years. Over the past 12 months, the company’s share price has declined 30%. Through five years, the stock is down nearly 50%. Management has cited growing competition for the stock’s underperformance.
Is BCE Stock a Buy?
The stock of BCE has a consensus Moderate Sell rating among eight Wall Street analysts. That rating is based on one Buy, three Hold, and four Sell recommendations issued in the last three months. The average BCE price target of $23.42 implies 6.36% upside from current levels.
