Opinions
Jeff Young
Bell Aliant
BA-T
DON'T BUY
Dec 13, 2013
Stock price when the opinion was issued
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Stock vs. Stock: MBT-T vs. BA-T. Both have their challenges. BA: very good management. Almost through rolling out fiber to the home. Decent dividend. High payout and no wireless exposure. BA has more catalysts. Payout ratio will come down when fiber to the home is complete. Maybe someday BCE will buy them out.
Bell Canada (BCE-T) taking over was a long time coming. Everybody knew this was coming. Makes sense for Bell Canada to start selling digital bundles, etc to other consumers. He is a huge believer in the telcos and the cable companies. If you own, he would recommend you roll over into Bell stocks.
Why is this selling below the bid price? He did some quick calculations when the bid came out and sold at a price over $31. The reason for this is that they have cut out the dividend. You are going to wait to November, and at that point in time you are going to get $31, so you have to discount that (The no dividend aspect?) Or you are going to get some mix of Bell stocks. In the meantime, the stock is going to trade off the Bell component. The stock is not going to do much. He would probably just sit with this.
A slow growth name. They are trying to build out their fibre to the home, which is very expensive to do. Have pension issues and need a lot of capital for the fibre to the home build out. Not particularly cheap. 7.1% dividend yield and doesn’t see a lot in the way of increases right now. Expect this would be very interest-rate sensitive.