The Big 3 Canadian telecoms, such as BCE Inc. (TSX:BCE)(NYSE:BCE), pay dividend yields of 4-5% with sustainable payout ratios. How do the telecoms differentiate from one another? Which telecom is best-valued? What about dividend growth prospects?
The telecoms, including Rogers Communications Inc. (TSX:RCI.B)(NYSE:RCI), and Telus Corporation (TSX:T)(NYSE:TU) generate stable cash flows from their operations. So, they’re great dividend investments.
BCE has increased its dividend for 7 consecutive years at a CAGR of 8.1%. It just increased its dividend in the first quarter by 5% to an annual payout of C$2.73 per share. BCE targets its free cash flow (FCF) payout ratio to be 65-75%. BCE’s free cash flow generation forecast for 2016 implies its payout ratio would be 70-76%.
Rogers has increased its dividend for 11 consecutive years. In the past 5 years, Rogers increased it at a CAGR of 8.4%. Based on its usual schedule, it was supposed to increase its dividend in the first quarter, but it has only maintained its quarterly dividend at C$0.48 per share.
Telus has increased its dividend for 12 consecutive years. In the past 5 years, Telus increased it at a CAGR of 10.9%. Based on its usual schedule, it should increase its dividend in the second quarter. This year, it plans to increase its dividend by about 10%.
Telus targets a payout ratio of 65-75%. Its quarterly payout of C$0.44 per share implies its payout ratio is about 71% based on its earnings estimates. Read More