Verizon Communications (VZ)

This has a pretty good dividend yield and a history of increasing its dividend. Companies like this deserve to be held for the long-term. If you sell your holdings, you are going to take the capital gains hit, and immediately have to pay some money to the government.

Telcos as a whole are very defensive. In this kind of volatile environment, they have held in very well. When they reported, their numbers were decent. They give an attractive yield.

Looking at US telecoms, there is good news and bad news. The good news is that you are getting big, fat, juicy dividends. The bad news is that the stock hasn’t really gone anywhere. Prefers Canadian telcos. Although the dividend yield might be lower, on an after-tax basis it becomes more attractive.

The US not only has much lower rates, but have companies that are making money on the lower rates. Thinks that in Canada there will be a lot of “cut the cable” behaviour. This company is competitive. Dividend yield of 5.05%.

Reinventing itself. It bought the minority interest of the wireless business from Vodafone (VOD-Q) a couple of years ago. Sold a lot of its wireline business to Frontier, so it is really committed to the wireless side of development, which is a very, very big growth area. Yields about 5%. Be patient and it will do well over time. Not expensive.

The US telecom stocks have been real laggards. The Canadian telecoms look interesting, but now the US ones look better. Good dividend, but the long term growth has slowed down. It is a great cash flow generator. These telecom providers will always be well positioned. 5% yield.

AT&T (T-N) or Verizon (VZ-N)? He tends to err on the side of caution, so he would prefer AT&T, the more stable side of the business.

His model price is $51.99, an upside of 13%. Dividend yield of 5%. A good defensive name.

Has been starting to look at Canadian telecom stocks again because they have been under some pressure. Then he compared them to the US telecom stocks, and found they were a lot cheaper than the Canadians’. Thinks people are a little reticent or worried about growth for this company. This, with its decent yield and very good valuation and owning the pipes that are going to generate the growth in the Internet traffic still, is pretty attractive right now.

This looks and smells more like a tech company than the telecom. They sold their wire line business. In all 50 states from a wireless standpoint. Recently did a deal to buy AOL and are creating a platform there. It is going to be video, data and streaming, which looks like technology to him. With the cash flow that they have, there is an opportunity to see 2 things; increasing organic growth and the revision of the multiple higher to reflect that growth.

Are the yields of 4.5%-5.5% sustainable on BCE (BCE-T), Verizon (VZ-N) and Vodafone (VOD-Q)? Most of the dividends are sustainable and he thinks they can afford to grow their dividends. BCE trades at a very high multiple at almost 16X earnings. Why people are worried about BCE is that it is not only a telephone company, but also a communications company. Verizon and Vodafone gives you much more of a pure play.

Verizon (VZ-N) or Atlantic Power (ATP-T)? He would go for this one, if only because you have security of income. The stock has done pretty well over the last few years.

This has a secure cash flow and a secure dividend. The difficulty is that service providers are having a hard time getting paid for what they do. There is recent legislation in the US around “net neutrality”, which basically makes it harder for the service companies to tier their pricing to their users. Telcos, as a whole, behave much like bonds do, in that they tend to be tightly tied to interest rates. With concerns that short rates may start to rise over the next few months, there could be a headwind for some of the telcos. He would prefer pharmaceuticals that have the same characteristics of a predictable business with a good cash flow and good dividends and some growth, such as Pfizer (PFE-N)

Telecom is always a good business, so you should be fine on this. Decent yield of around 4.5%. You not going to make a lot of money on it, but if you are in for yield, it is fine.

This whole space is a hyper competitive scenario. The whole idea of the post-paid, prepaid, contracts, subsidizing the Apple phones is a very intense of business. Cash flow on the top line is phenomenal. Looks pretty cheap versus their competition.