Just For FunThese are rough numbers...those of you that follow my posts know that I am a "back of the envelope" type of guy. Those that like math can post more precise figures.
If BCE were to cut its dividend by say 30% then its dividend yield at the current SP would be a bit higher than of say Telus or for US investors, Verizon. Such a cut would lower the ratio between dividends and FCF down to its historical long term average (ie 10-15 year average).
What would be the market reaction?
At a minimum, based on my experience of working on The Street before I retired many years ago is that it would halt the shorts picking on the company and provide an incentive for them them to take their profits and exit their positions and look for another target. This would at least halt the SP downward pressure and perhaps result in a short term temporary pop in the SP as the shorts cover their positions.
At best, the pros would breath a sigh of relief and bid up the price of BCE and start to look at the positives like the recent purchase in the US. Would this price increase be large? Probably not since BCE management would have to provide more evidence that they actually have their sheet together and demonstrate that they made a good decision based on tangible results.
As I have said many times before - until Management bites the bullet on the dividend, the SP will continue to be under pressure. Frankly, I have seen this movie countless times over the years.