BCE Inc. (TSX: BCE, NYSE: BCE), the top holding in the Dividend Champions Portfolio, delivered yet another steady quarter, with adjusted earnings per share increasing by 8%, while the dividend was raised by 5%.

Revenues rose marginally, and operating expenses were well contained, resulting in an adjusted EBITDA (earnings before interest, taxation, depreciation and amortization) increase of 3.2%. 

The wireless division remained the star performer, with a 7.7% increase in EBITDA, as the swelling ranks of subscribers paid more on average for the use of their devices. Critically important, the average revenue per user increased by 2.9%, while more profitable post-paid users also increased by 3.7%.

The secular trends in the wireline division continued, with landline connections declining by 6.2%, while TV and Internet connections increased by 2.8% and 3.1%, respectively. EBITDA in this division increased by 0.6%.

Management left their guidance for the full year unchanged, with earnings per share expected to be about 4% higher than last year, while the dividend is expected to increase by 5%. The balance sheet remains somewhat stretched, but cash flow is excellent.

The proposed acquisition of Manitoba Telecom Services for $3.9 billion (equivalent to 5% of the current BCE enterprise value) is moving ahead as planned, though approvals from the telecom regulator and the competition commission are still pending. The transaction, which is expected to close by the end of 2016 or early 2017, will be paid partly in cash and BCE shares, while BCE will also sell a portion of its post-paid wireless subscribers to Telus.

BCE indicates that the transaction will be cash-flow positive, with significant operational synergies of around $50 million and additional tax savings. BCE has managed to extract considerable synergies from the Bell Alliant acquisition in 2014, and we expect more of the same from this deal, assuming it secures regulatory and shareholder approvals.

BCE’s valuation remains attractive in absolute terms, with an enterprise value to EBITDA ratio of just over 8 times and a dividend yield of 4.4%. We estimate the fair value of the stock at C$70, or US$53.

Brookfield Infrastructure Partners LP (TSX: BIP-U, NYSE: BIP) reported a 10% increase in second-quarter funds from operations per unit (FFO is an estimate of operating cash flow). The distribution per unit was 11.3% higher than a year ago.

Brookfield’s Utilities business, its largest division, posted an 8% increase in FFO, while Transportation, the firm’s second-largest division, recorded slightly lower profits. The swing factor was the Energy division, where profits almost doubled on the back of a higher contribution from existing operations and an increased stake in NGPL.

The balance sheet is fully levered, with a debt-to-capital ratio of 61%, though the firm’s credit rating remains investment grade.

Management believes growth prospects are good as currently owned assets grow profits and new investments start to make a contribution to the bottom line. In addition, they see excellent opportunities to acquire quality assets to grow the various verticals of the business.

FFO per unit for the full year is expected to grow 11%, while the distribution is projected to rise by 8%. The dividend yield remains an attractive 5.0%.

Brookfield also announced a three-for-two split of its units, effective Sept. 14 for holders of record on Sept. 6. This is a non-taxable event and should have no influence on the value of the business. Each unit price will be reduced by one-third, and unitholders will be compensated by the issuance of additional units.

CI Financial (TSX: CIX, OTC: CIFAF), a midsize independent asset manager, produced somewhat disappointing second-quarter results, with earnings per share down 6% year over year. Nevertheless, the firm increased its monthly dividend by 5%.

The asset manager suffered its second consecutive net quarterly outflow of assets under management, as two institutional investors made large redemptions. Profit margins were also squeezed due to the trend toward lower management fees for actively managed accounts.

Fund performance is a key factor in attracting new money, and here the company has been falling short of late, with the average ranking of its top 20 mutual funds now in the third quartile among peers over the trailing one- to five-year periods. CI’s profitability is ultimately dependent on the performance of its investment funds, its ability to attract new assets, and the performance of the overall market.

The balance sheet remains strong, and cash flows are abundant. Free cash flow is currently fully utilized to pay dividends and repurchase shares.

During CI’s analyst call, management said that it expects considerable inflows of new funds based on the award of a large institutional mandate, as well as a promising pipeline of new asset inflows. The recently acquired First Asset Management, a provider of exchange-traded funds (ETFs), also seems to be doing well, and management expects this business to launch several new products later this year.

We see better days ahead for this high-quality operation, though it may take time for the firm’s portfolio managers to turn their performance around. Meanwhile, CI’s valuation is attractive, with a dividend yield of 5.3% on a payout ratio 70% of profits.

Telus Corp. (TSX: T, NYSE: TU) produced respectable second-quarter results, with adjusted earnings per share 6.1% higher than a year ago. The dividend was increased by 9.5%.

Revenues rose 1.5%, with both the wireless and wireline divisions generating higher sales. Operating expenditures declined by 3%, resulting in an adjusted EBITDA (earnings before interest, taxation, depreciation and amortization) increase of 6.3%.

The wireless division increased adjusted EBITDA by 3.6% year over year, as subscribers increased by 0.9% while also paying more on average for the use of their devices. Critically important, the average revenue per user increased by 1.4%, while more profitable post-paid users increased by 2.1%.

The secular trends in the wireline division continued, with landline connections declining while TV and Internet connections increased by 7.9% and 6.4%, respectively. The segment’s EBITDA increased by 6%, as data revenues jumped 7%.

The balance sheet remains somewhat stretched, with a debt-to-capital ratio of 60%. But management intends to reduce debt over time as the benefits from the spectrum acquisitions and infrastructure buildout come to fruition.

Telus continues to aggressively grow its dividend, with the payout rising by 7% to 10% annually. Once again, however, free cash flow fell short of covering the second-quarter dividend, indicating that the company essentially has to borrow to finance its payout. Therefore, we suspect the firm may have to dial back dividend growth in the not too distant future.  

The stock’s valuation remains attractive in absolute terms despite the profit slowdown, with an enterprise value to EBITDA ratio of 8.1 times and a dividend yield of 4.3%. We estimate Telus’ fair value at C$49, or US$37.

Whistler Blackcomb’s (TSX: WB, OTC: WSBHF) board of directors has agreed to a takeover proposal from Vail Resorts for a C$36 per share cash-and-stock deal. The bid represents a 43% premium to WB’s closing price prior to the announcement.

There are numerous hurdles that the transaction will have to clear, including approvals from WB shareholders, the British Columbia Supreme Court and approvals under the Investment Canada Act and the Competition Act. WB is also engaged in sensitive discussions with the Squamish and Lil’wat First Nations, on whose traditional lands the facilities are operated, for the extension of the master operating contracts and agreements to expand the facilities.

Whistler is a unique and world-famous ski facility and clearly a prized asset for Vail. However, the proposed price is above our fair-value estimate of C$26 and likely but not completely certain to proceed. We have therefore decided to sell the shares that we hold in the Dividend Champions Portfolio for a profit of 101% since first recommended a little more than a year ago. Sell Whistler Blackcomb.

Earnings Checklist

The table below lists the date for each Dividend Champion’s earnings announcement along with our expectation for the dividend. The companies highlighted in green have already reported results. Please note that some of the dates listed below are estimates based on the timing of prior-year releases and are therefore subject to change.