Quote:
Originally Posted by Slava
To be fair, I haven’t really analyzed Bell and don’t own it. But I think their dividend payout is like 140% at this point, and that’s only sustainable for so long. Eventually they’ll either cut the dividend, earn more so that’s no longer an issue or borrow money to keeping the dividend. (Or a combination of those three).
I am personally not someone who cares about dividends, so seeing Bell with the high yield doesn’t really get me too excited.
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Aside from the fact they have been borrowing money to pay their dividend and have thus racked up huge debt, the market also hates their go-forward strategy. They sold their share of the Leafs/Raptors to Rogers for a big pile of money. Since those assets are valuable but don't kick out much cash this was regarded as a way to reduce debt and right the ship.
Then almost immediately they spent all the money plus a bunch more buying us Fibre assets at a high price. They don't have US cellphone assets, so there's no synergy or cross-selling opportunities, and since they have minimal US operations they probably can't cut any costs. But at least they paid a very high multiple of earnings/EBITDA...