We Like BCE and Its Spin-off

Article Excerpt

BCE INC. $26.55 (Toronto symbol BCE; SI Rating: Above-Average) is reorganizing its businesses to unlock shareholder value. The company will combine its traditional telephone operations in rural areas of Ontario and Quebec with those of 53.2%-owned ALIANT INC. $35.30 (Toronto symbol AIT; SI Rating: Above average) into a new income trust called Bell Aliant Regional Communications Income Fund. BCE will assume control over Aliant’s wireless and other operations. BCE shareholders will receive 0.0725 trust units for each share they own. They will also receive 0.915 of a new BCE common share for each old share. Aliant shareholders will receive one trust unit for each common share they hold. BCE intends to continue its $1.32 common share dividend after the spin-off. The new trust will initially pay monthly cash distributions of $0.23 a unit, or $2.74 a year, for a yield of 7.8% on Aliant’s current price. Bell Aliant Regional will generate steady cash flows, and should profit from growing demand for Internet services. The…

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