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yield hog

John Heinzl is the dividend investor for Globe Investor's Strategy Lab. Follow his contributions here. You can see his model portfolio here.

I hate dealing with BCE Inc. as a company. That's one of the reasons I love it as an investment.

Let me explain.

Once a year or so, I open my Bell home phone and Internet bill to find that my rate has mysteriously increased. Frustrated, I call customer service and threaten to cancel my service unless they can come up with a better deal.

That's when I get the "good" news: If I move up to an Internet package with higher speeds and more gigabytes of data than I'll ever use, I'll qualify for a temporary "promo" price which, when combined with my home phone "bundle savings," will make my bill lower than it would otherwise be – but still, sadly, higher than I was paying before.

Yet I never follow through on my threat to leave. As maddening as it is to deal with Bell, the idea of switching providers – and possibly being without Internet service for five minutes – fills me with an even deeper sense of dread.

So I stay, and my charges keep rising. Based on a cursory look at my past bills, I'm paying about one-third more than I was just three years ago.

How do I fight back? By owning BCE's stock.

If I'm shovelling more money into BCE's coffers, you can bet thousands of other chumps just like me are doing the same. Our collective inertia is helping to boost BCE's revenue and earnings, which come back to investors in the form of a rising share price and growing dividend.

So far, I'm pleased with the tradeoff.

The stock – which I own both personally and in my Strategy Lab model dividend portfolio – has produced a total return, including reinvested dividends, of about 20 per cent annually over the past five years. The dividend has risen by nearly 50 per cent in that time, including a 5.3-per-cent increase announced Feb. 5. (BCE Inc. owns 15 per cent of The Globe and Mail.)

I'm not suggesting that such outsized returns will continue, but there were some positive signs in BCE's fourth-quarter results released last week.

Fuelled by strong growth in both the number of subscribers and average revenue per user (ARPU) in BCE's wireless segment, the company posted results ahead of expectations. In a trend that augurs well for the company, smartphone users are buying larger data plans as they consume more video on their devices.

The migration of wireless customers to the LTE (long-term evolution) network, which offers faster streaming and download speeds, is helping to drive the increase in data consumption.

"Over all, 47 per cent of our base is now on LTE. The encouraging thing for all of our investors is 53 per cent are not," chief executive George Cope said on the fourth-quarter conference call. "That migration will, of course, continue."

One of the most pleasant surprises in the fourth-quarter results was the resilience of BCE's wireline business, which includes home phone, Internet and FibeTV. For the first time since cable telephony was launched in 2005, BCE reported growth in wireline revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) and a net increase in "residential generating units," or RGUs, which refers to the total number of services taken by households.

BCE is not without risks. For one thing, with a price-to-earnings multiple of about 16.8 based on 2015 estimates, the stock isn't exactly cheap, even after a recent pullback. According to Bloomberg, the average 12-month price target on the stock is $56.36 – BCE closed Tuesday at $55.68 – indicating that most analysts believe the shares are fully valued and don't expect much capital appreciation in the near term.

Regulatory risk is another concern, both from the potential introduction of pick-and-pay TV and the possible emergence of a fourth national wireless carrier. "BCE faces regulatory headwinds in all of its businesses," Macquarie analyst Greg MacDonald said in a recent note, in which he also expressed skepticism that BCE can maintain 5-per-cent dividend growth beyond 2015 "as we question BCE's pricing power amid a rapidly maturing industry."

Canadian communications shares can deliver nasty surprises, as anyone who remembers the 2013 scare over Verizon's potential entry into Canada can attest. But with its 4.6-per-cent dividend yield, growing wireless base and improving wireline division, BCE would appear to offer an attractive package to investors. One thing is for certain: Seeing those dividends from BCE land in my account every quarter makes it easier to deal with the frustration of opening its bills.