More yield, less growth

Article Excerpt

BELL ALIANT REGIONAL COMMUNICATIONS INCOME FUND $25.47 (Toronto symbol BA.UN: Units outstanding: 127.3 million; Market cap: $3.2 billion; SI Rating: Above Average; Yield: 11.4%) provides traditional land-line phone service in Atlantic Canada and rural parts of Ontario and Quebec. The trust will revert to regular corporate status before January 1, 2011. This will force it to pay income taxes, so its yield of 11.4% will shrink, even after allowing for the dividend tax credit. But its yield will stay well above BCE’s. As part of the 2006 deal that created the trust, Bell Aliant transferred its wireless operations to BCE (which owns 45% of Bell Aliant). This cut into Bell Aliant’s growth. In 2009, the trust lost 5.0% of its phone subscribers. But its 2009 cash flow per unit still rose 8.0%, to $3.39 from $3.14. That’s partly due to cost cuts, which included laying off 5% of its workforce. But Bell Aliant also improved profits by upgrading its high-speed Internet service. It…

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