Bell Aliant (BA.TO)

COMMENT
The problem is, come January 2011, will lose its tax advantage. Low growth is not so good for a corporation. Sees it stagnating. Okay to Hold now but as time passes they would be increasingly nervous about the distribution.
SELL
Good defensive name, particularly in this type of economy. Focused primarily on wire line on the East Coast. Yield of about 11% and expects that will be maintained over the next year. Longer term it will be challenged because of very little wireless exposure. Look for a 25%-30% cut in distributions after they convert post 2011. A little bit expensive, especially relative to BCE (BCE-T). Consider switching to BCE, which is yielding about 6.5%.
DON'T BUY
Would focus more towards the wireless space such as Telus (T-T) or Rogers (RCI.B-T). 11% yield but is in the traditional wire line space rather than wireless.
DON'T BUY
Bonds maturing 2016 with a yield of about 5.85%. BBB credit. Have a monopoly in their area and the parent company is Bell Canada (BCE-T). He prefers a more diverse telecom name with greater geography to draw from. Not a lot of liquidity so may be difficult to sell. Would look at Bell (BCE-T), Rogers (RCI.B-T) or Telus (T-T).
COMMENT
Expect distribution should be sustainable until they have to convert to a corporation. After that they will be taxable like anyone else.
COMMENT
They’ll try to keep a reasonable yield but once they become a Corporation will probably have to cut back, possibly 30%-40%. You also have to wonder where their growth is going to come from.
PAST TOP PICK
(A Top Pick June 5/08. Down 15.9% excluding disbursements.)
BUY
Very steady unexciting business but right now bland is pretty good and the yield is pretty good and will probably stay that way for a couple of years. Over time, the landline business is being eroded.
BUY
Very comfortable with this one. The regional companies are likely to be picked up by one of the seniors. 11.75% distribution.
COMMENT
Believes that eventually BCE (BCE-T) will take it in under the new leadership. Very healthy distribution without much risk.
BUY
The landline phone company in eastern Canada. Stable company. 12% distribution.
BUY
(Market Call Minute) Well run management team.
HOLD
(Market Call Minute) Hold based on dividend.
DON'T BUY
Paying almost 12%, but when it becomes a corporation in 2011 they are likely to cut dividend to about 2-1/4%. P/E ratio is a bit high – there is some capital risk.
DON'T BUY
Market Call Minute. Boring infrastructure utility with declining revenue base, not exciting.
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