Telus Corp (T.TO)

Telcos have been good at competing cooperatively, a very cozy place to be. Looks at these as free cash flow machines and how much cash they generate. Today they have some challenges. Some parts of the business have structural issues, and they have been very good at managing that. Over time, there are things that have to be monitored, in terms of competitive intensity in things like wireless. Right now it is pretty even, but we are going to have to see what happens with Shaw and Wind Mobile which can tend to be disruptive. Well-run and the dividend is safe. Wouldn’t count on much more than the 4.4% dividend at this point.

RCI.B vs. T-T. There is probably more growth potential in T-T, but there is less diversification. He prefers T-T. He expects the relative outperformance to continue.

If you are a dividend investor, this is a place to put money. This is a telco that will probably do well as oil turns around because of their Western exposure. Canadian telcos have been the beneficiary of lower oil pricing, in the sense that people wanted money out of the energy space and went into telcos. Valuations in Canadian telcos now are about a multiple turn more than in the US. If the Canadian economy improves, you might want to take some chips off the table at that time.

A particularly well managed company. They are continually eating away on the heels of their competitors. He has a problem with their multiple. On the positive side they have a higher dividend. In terms of valuation he finds it hard to justify most of the telecom stocks. He owns just a little of BCE as a lot term for some of his clients.

Trading at a reasonable valuation. Has a little bit more Alberta orientation, but likes the 4.3% yield. This is his favourite in the Canadian telecom space.

It dipped down when Wind was acquired by Shaw. Also, T-T has a larger exposure to Alberta. She does not own telecom right now. She goes other places for yield. T-T has announced they plan to increase their dividend 10% per year going forward.

Lightened up, mainly because of the focus in Alberta. They have done a lot of good business in Alberta, but the stats coming out of that province are not looking good. Until we get the oil situation straightened out it is going to be a tough market area to do well in. Prefers BCE (BCE-T).

For his more conservative clients seeking income, he prefers Bell Canada (BCE-T), but for those looking for more growth, Telus offers the best growth. Everybody has to own at least one telco, and maybe 2. Every time the CRTC does something, somehow the majors managed to make more money than they did before. It is like magic.

A lot of their business is coming from Western Canada, so the stock has fallen off quite a bit. He would probably look at this again at some point, but technically it is still below the 200 day moving average. He would stay away until there are more signs of strength. Needs to get above the $41-$42 level before he would dip into it. (See Top Picks.)

Has never owned this because it was too expensive. With this you have to deal with the Alberta issue. He prefers BCE (BCE-T) which has done a great job with fibre and with content.

He likes the name. All the Telcos in Canada are a buy. Foreigners are not going to come into the space. It sold off because of what happened in Alberta. Smart phone adoption in Canada is a lot less than in the US. Great dividend.

(Market Call Minute.) At $40 or lower, this is a great buy.

Model is $31.61. If it got down to $29.50 he would be pounding the table.

Under pressure because of the new entrant into the phone business. They have been under a lot of pressure. He prefers RCI.B-T because of ties to other areas, but this whole sector has been under pressure. BCE-T seems to be doing better.

(His top picks are dividend growers.) When a company raises its dividend, it is signalling to investors that it thinks the year ahead is going to be good. This one has been a wonderful dividend grower with many, many years of dividend growth. 2 dividend increases last year added up to about 10%. The stock has been hurt by the sentiment of its exposure to the energy intensive provinces. Dividend yield of 4.56%.