Verizon Communications (VZ)

Which one you prefer between AT&T (T-N) and Verizon (VZ-N) for an RRSP? Good companies with fine dividends. In terms of total return there are other companies with lower dividend yields but better growth prospects that he would rather choose.

The Canadian communications sector still looks over valued, that is why he is looking to this US holding. The company is making a huge bet on being the 5G provider. To get a 12 times PE and good yield, he sees this as a good bet. Yield 4.5%. (Analysts’ price target is $56.46)

More of a wireless than a telco company. Growth has really slowed down in this sector, yet cell phones remain an essential business. He likes Verizon and it's a little pricey now, but good long-term. Pays a nice dividend.

It is a large holding in a number of his funds. It has a nice dividend and the service revenues are good. They are getting better. They have the best margins in the space and have the best opportunities for 5G because they can roll out faster. He trusts them in terms of allocating capital well. They are more profitable than their peers so they can better survive any price wars.

Telecoms should be owned later when the economy retracts. This stock has been sideways, though has a decent growth rate. He may buy this in a few years. But it's okay to hold this purely for the dividend, but don't expect share price growth.

Whoever owns it, say they like if for the dividend. He would caution investors about wanting to own this merely for the dividend. The stock has done nothing and he thinks you would do better with a lower yield stock, but with better growth potential. He is not interested in this space at all as he thinks the dividend could be under pressure. (Analysts’ price target is $56)

VOD-Q vs. VZ-N. He prefers Euro telcos to Canadian. They have room in Europe to add to the bill per subscriber.

They sold their wireline business a few years ago and bought out the minority interest of Vodafone, putting all their eggs in one basket which did not pay off. Margins on wireless aren't as rich anymore. Telecoms don't do well during rising interest rates. Look elsewhere.

AT&T vs. Verizon? Verizon is the better-quality company. Both offer good dividends, but Verizon has less debt and a better network. If you want dividend income, go with AT&T. If you want growth, go with Verizon.