Canadian telecom company BCE, Inc. (BCE, BCE.TO), the parent company of Bell Canada, reported Thursday a 7% increase in its annual common share dividend for fiscal 2010. The company said it would use its year-end 2009 surplus cash balance for a share buyback and for a special pension contribution. In addition, BCE updated its financial guidance for 2009.
BCE plans to increase annual dividend to C$1.74, which will be effective with the first quarter of fiscal 2010, to shareholders of record on March 15, 2010, payable on April 15. BCE said the increase maintains its payout ratio conservatively towards the lower end of its policy of 65% to 75% of adjusted earnings per share for 2010. George Cope, president and chief executive officer of BCE and Bell Canada said, "BCE is committed to delivering attractive ongoing returns to our shareholders and has done so through consistent and sustainable dividend increases and share buybacks since December 2008."
With the recent increase of 7%, the company's annual common share dividend improved by 19% since the fourth quarter of 2008. BCE also said that this is its third increase to the annual dividend and the second share buyback since the termination of its proposed privatization agreement in December 2008. BCE had completed its C$1 billion share buyback program on May 5, 2009 for 5% of outstanding common shares at an average purchase price of C$24.65 per share.
Through the Normal Course Issuer Bid or NCIB, the company plans to use its surplus cash to buyback upto C$500 million shares and to make a contribution of C$500 million to special voluntary pension.
BCE said that under the NCIB, it may purchase for cancellation up to 20 million common shares, subject to a maximum aggregate purchase price of C$500 million, over the twelve-month period starting December 29, 2009 and ending on December 28, 2010, representing about 2.6% of its 767.17 million issued and outstanding common shares as at December 11, 2009. BCE anticipates the special voluntary pension contribution to decrease its annual pension funding requirements and pension expense beginning in 2010 by up to C$75 million and C$45 million respectively, which will be accretive to EBITDA, earnings per share and free cash flow. In addition, BCE said that it will make its special contribution to Bell Canada's defined benefit pension plan from cash on hand, which is expected to take place prior to year-end 2009. The contribution is tax deductible and will lead to the company's cash tax savings of nearly C$135 million in early 2010. Siim Vanaselja, chief financial officer said, "This special pension contribution helps to strengthen Bell's pension plan and will favorably impact our financial performance going forward, in turn enhancing our ability to return additional cash to shareholders." As a result of the special pension contribution, the company updated its financial guidance for 2009 and said it now expects the high end of the range of adjusted earnings per share guidance of C$2.40-C$2.50 provided in August. Revenue growth is anticipated to be in the low end of the range of the previously provided growth of 1%-2%. "Our accelerating business performance built on the Bell team's strong execution of our 5 Strategic Imperatives, substantial free cash flow generation and ample liquidity provide us with the financial flexibility to reward shareholders while maintaining both a strong balance sheet and robust capital investment in Bell's networks and service programs," added Cope.
BCE is currently trading at $25.36, up $0.51 or 2.05%, on a volume of 77 thousand shares, while BCE.TO trades at C$27.09, up C$0.71 or 2.69%, on 1.13 million shares.
For comments and feedback contact: editorial@rttnews.com
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.