Globe says high-yield BCE, Telus ripe for the picking 2024-09-17 05:35 ET - In the News
Also In the News (C-T) Telus Corp (2)
The Globe and Mail reports in its Tuesday edition that the dividend yields of Canadian telcos are hovering near 20-year highs, even as bond yields nosedive and central banks embrace rate cuts. The Globe's David Berman quotes CIBC analyst Stephanie Price saying in a note, "Given their stability and high dividend yields, telecom companies have been viewed historically as bond-proxy stocks, making the sector sensitive to changes in interest rates." That is good news for long-suffering investors who have seen their telcos struggle as bond yields soared to multiyear highs over the past couple of years. Declining interest rates tend to send bond yields lower as well. As bond yields shrink, dividends look more attractive. Already, the Bank of Canada has cut its key rate three times this year, and economists expect that more cuts are coming. The Fed is widely expected to cut its key rate by at least a quarter of a percentage point tomorrow. Government bonds and many dividend stocks have already responded to this shift. But the yields on Canadian telecom stocks, while off their recent peaks as share prices have rebounded modestly this year, remain high: BCE's yield is 8.3 per cent while Telus is close to 6.8 per cent.
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