BCE (TSX:BCE) is one of the stocks that is often mentioned as a great long-term investment to hold. That being said, the company did just announce fourth-quarter (Q4) results along with a restructuring initiative today. Is it the right time to buy BCE stock?
Let’s try to answer that question.
Q4 results are in
BCE just announced the results for Q4. During the quarter BCE posted net earnings of $435 million, representing a 23.3% decline over the same period last year. Free cash flow during the period increased to $1,289 million, reflecting a $913 million increase.
Apart from the earnings announcement, BCE reported that it would be undergoing a massive restructuring operation. Specifically, the company plans to reduce approximately 9% of its workforce, or 4,800 positions this year.
The reductions are slated to provide annualized cost savings of $250 million. It also includes shuttering several of BCE’s radio stations across the country.
The reduction is the largest undertaken BCE. in nearly 30 years and is part of a larger, longer-term transformation. BCE refers to this transformation shifting from a more traditional telecom to a provider of tech services and digital media leader.
That transformation also includes the rebranding of The Source retail stores into Best Buy Express outlets. The 165 electronics stores represent a collaboration between BCE and Best Buy Canada.
So, does this mean it’s the right time to buy BCE stock?
Let’s not forget what BCE still offers investors
BCE is well known for its defensive appeal. Part of that appeal always stemmed from the complementary revenue stream from its media business. While this recent announcement does minimize the appeal of that media segment, there are two key points to consider.
First, we should see the impact of that expanding retail business from its Best Buy Express venture begin to add to the bottom line as those stores begin to open later this year.
Second, despite the restructuring cuts, BCE maintains a massive media presence, which won’t disappear anytime soon. That means the alternative revenue stream that accompanies BCE’s core subscription business is still there.
Oh, and speaking of the core subscription business, let’s take a moment to talk about that area.
In the most recent quarterly update, BCE reported wireless service revenue increased 3.9%, while blended average revenue per user (ARPU) increased 0.4%. In total, BCE saw over 170,000 mobile and connected device activations in the quarter.
The retail internet segment also saw strong growth, with 55,591 net subscriber activations during the quarter. This made it the second-best Q4 result for the segment in nearly two decades.
In other words, there’s still plenty of growth that prospective investors should take into consideration. It may even help make it the right time to buy BCE stock for some investors.
Finally, let’s talk about dividends
One of the main reasons why investors continue to flock to BCE is for the juicy dividend it pays to investors. Few investors may realize this, but BCE has been paying out a handsome dividend to investors for well over a century without fail.
BCE has also provided annual upticks to that dividend for over a decade and announced its 2024 increase during today’s announcement. The 3.1% uptick brings the dividend to a whopping $3.99 per share.
As of the time of writing, the yield on that increased dividend is a whopping 7.83%, making it one of the best-paying dividends on the market. Given the weakness of the stock over the trailing 12 months, that might make it an ideal time to buy BCE stock.
Final thoughts
No stock is without some risk, and that includes defensive gems like BCE. Fortunately, in this case, BCE operates a well-diversified operation that includes both regulated and retail elements. The company also appeals to both growth and income-seeking investors, making it hard to ignore.
In my opinion, BCE should be a small part of any well-diversified portfolio, and current market conditions make it a unique time to buy BCE stock.
