Verizon Communications (VZ)

Even though the street does not like this, it is a name you might want to look at. Trading at 13X earnings. They were basically only $.01 under earnings, but missed quite a bit on the revenue side. He thinks that is going to change.

This is a stock that made investors a ton of money in the 90s, but hasn’t made any money since. The problem is that they had to keep cutting prices, and that doesn’t seem to be getting any better. It looks like their revenue line keeps getting smaller. Dividend yield of 4.6%.

This company is facing some challenges such as increasing competition from the wireless side. A very competitive business. A lot of the smaller carriers are being fairly aggressive on pricing. He would suggest selling your holdings and try to get in with at least a 10% lower share price.

If it gets back to $46.81 it would be fantastic to buy it there. $46.77 is the model price.

She likes it. It is one of her defensive stocks because of the high dividend yield. It has stable growth, but we have not seen a huge amount of cellular growth. It is about international growth which is slowing. She likes the dividend yield at 4.7%, however.

They reported earnings that were disappointing. They moved into wanting to create a wireless footprint and sold their wire line business. They are actually losing revenue per user. He owned this until 6 months ago when he moved away from the more defensive companies. He does not recommend waiting for it to recover. It has always been known as a high dividend payer, but if they purchase very large properties then the dividend could be at risk down the road.

The kind of stock you own for the long-term. He wouldn’t get shaken out because of anything to do with interest rates.

AT&T (T-N) or Verizon (VZ-N)? Chart shows that AT&T has outperformed by about 10%. Within the sector, there is lots of news. One way to try and resolve this is to start a position in iShares Trust Dow Jones U.S. Telecom Sector Fund (IYZ-N), and you are probably going to see procyclical names again. The sector lagged a little, and as we get past the middle of the year this area should probably pick up.

He sold his VZ-N some weeks ago before the election. The steeper yield curve tends not to be good for Telcos. They are a bit of a bond proxy. They are moving away from the wire line business, which had a higher margin attached to it. Their earnings are flattening out.

Sold his holdings about 2 or 3 weeks ago, because of interest rates being on the rise and the yield curve steepening. That is generally not good for telcos, as it lessens the impact of the dividend. They also tend to carry a large amount of debt on their balance sheet, which is not a great thing in a rising interest rate environment.

The stock has sold off hard, on the back of rising interest rates hurting yield oriented assets. With the potential acquisition of Yahoo, it is creating a pipe of being wireless. They have the files on the cable side and the broadband, and with the potential content through Yahoo, they are creating that end-to-end experience for consumers. Big dividend.

Valuations have come down for the whole telecom group. Dividend is safe. A lot of the recent downturn has been relative to the interest rate. The acquisitions and the debt that has gone on in the last couple of years has been massive. He is warming up a little more to Canadian telcos, which he feels has a little more growth potential.

Market Call Minute. She would hold this one for its yield.

It has fallen along with telecom competitors. It is sentiment over the whole sector. If you have a longer term horizon it is a great company to own that pays a great, safe dividend. They are acquiring Yahoo and will probably acquire others.

He doesn’t follow this closely, but it does meet his ROE criteria. If looking for a stable performer, he thinks it would be a good company. Chart indicates they have come off recently, but have broken out, and he wouldn’t have a problem initiating a position at these levels.