Darden Restaurants (DRI)
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Darden Restaurants

BCE Inc. (BCE) is the largest communications company in Canada.  It has substantial market share in wireless, landline phones, high-speed Internet, and satellite TV.  The company has recently acquired CTV which was formerly the largest privately owned television company in Canada for 1.3 billion dollars.  This acquisition included major subsidiaries such as TSN.  Just to prove how broad their interests are, BCE also owns 15% of Canada’s biggest newspaper the Globe and Mail and a 45% stake in the Bell Aliant Regional Communications Income Fund.  The company announced during the first quarter that they would be raising their already substantial dividend 5% and that their revenues had increased 9% over the first quarter of 2010.  Although BCE Inc. (BCE) faces major competition from the other 3 big dogs in the Canadian telecom game (Shaw Communications (SJR/B), Rogers Communications RCI/B), and Telus Corporation (T) they are the unquestioned overall leader in the industry and are very well diversified.


Bell smartphonesUpcoming Opportunities and Dangers:

 

We are just beginning to see how this new media conglomerate will look after BCE completed their massive wholesale purchase of CTV and its speciality channels in September of 2010.  All indications are that it was a great purchase.  The quick retaliatory moves by BCE’s major competitors seen Shaw Communications purchase the Canwest Global network, and Rogers Communications purchase City-TV.  If this is any sort of measuring stick or indication of the relative power of the three companies then clearly BCE Inc. (BCE) has a sizeable advantage as CTV’s presence dwarfs the other two.

 

When sizing up BCE as a potential stock purchase I was immediately drawn to the clear and concise mission statement that has been reiterated in recent press releases.  The message is, “Bell is focused on achieving a clear goals – to be recognized by customers as Canada’s leading communications company – through the execution of 5 Strategic Imperatives: Improve Customs Service, Accelerate Wireless, Leverage Wireline Momentum, Invest in Broadband Networks and Services, and Achieve a Competitive Cost Structure.”  These clear goals stand in stark contrast to BCE’s competitors who appear to have less defined objectives.

 

The first quarter dividend raise is the sixth such raise since the fourth quarter of 2008.  Overall this represents a 42% increase.  Notably the company has a much longer track record of dividend payment (62 years) than its main competition.  When initially comparing charts of the “Big Four” telecoms in Canada, BCE tends to look the least attractive due to its relatively flat trajectory compared to the other three companies who have seen much more recent growth.  We are now facing 3 growing competitor against a time-tested business structure in place at BCE Inc. (BCE) that has allowed them to navigate increasing competition for decades and still stay on top.

 

I personally appreciate BCE as a steady dividend-paying buy.  One look at the graphs will tell you that BCE Inc. (BCE) likely will not blow you away with growth opportunities in the coming years, but neither will the other Canadian telecoms according to most industry analysts.  BCE enjoys absolutely a massive infrastructure advantage which gives them a retail edge over new arrivals on the telecom scene because it enables them to piggyback on existing networks as they build their brand.  Their diversity allows them to withstand new challenges or changes in any specific sector of their telecommunications empire, and that characteristic, as well as their clear game plan and extremely attractive dividend, make them a good choice out of the Canadian telecoms in my opinion.

 

BCE Canadian Dividend Stock Graph

TSE BCE

BCE Canadian Dividend Stock Metrics