{"id":277351,"date":"2010-02-04T11:07:00","date_gmt":"2010-02-04T16:07:00","guid":{"rendered":"e2249889-c78b-43e3-9643-b1d7d4aa587b:391269"},"modified":"2010-02-04T11:07:00","modified_gmt":"2010-02-04T16:07:00","slug":"expect-big-distribution-cut-from-bell-aliant-post-conversion","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/277351","title":{"rendered":"Expect big distribution cut from Bell Aliant post conversion"},"content":{"rendered":"

Investors will have to wait until May to get more clarity on Bell Aliant Regional Communciations Income Fund's plans to convert to a corporation. <\/p>\n

However, based on estimates from the Street, one thing is already for sure. The wireline company's current distribution will need to be cut. <\/p>\n

Yesterday, Bell Aliant released inline fourth quarter results and guidance for 2010, including a distributable cash estimate of between $750 – $790-million, which equates to a $2.90 per share payout this year. Management said it will announce its post-conversion dividend policy in May, after one more quarter of economic and competitive visibilty. <\/p>\n

"While we view the current 10.9% yield as attractive, investors should
\nbe aware that while we expect the distribution to be cut to $2.60\/share in 2011 from $2.90 in 2010, the new distribution rate is
\nnot sustainable in the long term," said Maher Yaghi, analyst, Desjardins Securities.  <\/p>\n

"While Bell Aliant is not expected to pay much in cash taxes until 2013, a tax run rate of 27% beyond that time will require a further distribution cut." <\/p>\n

Mr. Yaghi estimated the distribution will need to be cut to a range of roughly $2.10 to $2.20, resulting in a yield over the long term of about 8% based on the current unit price.  <\/p>\n

Overall, Mr. Yaghi said his thesis remains unchanged for Bell Aliant. He maintained his Hold rating and trimmed his price target to $26 from $27, saying the unit price currently represents fair value.  <\/p>\n

Based on a similar assumed effective tax rate, Phillip Huang, UBS analyst said Bell Aliant has the capacity to support dividend payments of $2.25-2.50 per share. <\/p>\n

"This would imply a yield of 8.6%-9.5%, which would be more attractive than MBT's 7.9% yield," he wrote, reiterating his Neutral recommendation and $25.50 price target.  <\/p>\n

Meanwhile, Michael Mills, Beacon Securities analyst, told clients he expects an annual dividend in the range of $1.80-$2.00 per share starting in 2011, "despite the ability to shelter tax for the first couple of years."<\/p>\n

He maintained his Hold rating, and 12-month price target of $26. <\/p>\n

David Pett<\/a><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Investors will have to wait until May to get more clarity on Bell Aliant Regional Communciations Income Fund's plans to convert to a corporation. However, based on estimates from the Street, one thing is already for sure. The wireline company's current distribution will need to be cut. Yesterday, Bell Aliant released inline fourth quarter results […]<\/p>\n","protected":false},"author":4060,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-277351","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/277351","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4060"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=277351"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/277351\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=277351"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=277351"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=277351"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}