Bell Aliant (BA.TO)

TOP PICK
Good chance that BCE could buy them. Price is low. Not a growth business, slowly eroding, but lots of cash flow to service payout 12% distribution. Once it’s not a trust any more, the payout will come down a little bit. They have tax losses they can use and payout will still remain at a relatively high rate, plus a chance BCE will take in the rest of it or sell it to someone else.
BUY
It will be interesting to see if it can continue paying the distribution. If you want to buy, set a level of $21.50, but if it goes below $19.5 you have to get out.
PAST TOP PICK
(Top Pick Oct 5/07, Down 29%) Not unhappy with the holding and will keep holding it. Not trading far away from where it was when it was a corp.; not terrible exciting, but solid and conservative and well run.
HOLD
Yield is strong, low risk of distribution cut, but lacks long-term growth catalyst because they sold off their wireless business. No reason from an operating point of view that it needed to sell off.
BUY
Reasonable valuation, reasonable dividend
HOLD
Can't see the growth prospects being very strong. When the BC (BCE-T) deal gets done there will be money looking for a new home in utilities. This might be one of the beneficiaries but prefers Rogers (RCI.B-T) instead.
DON'T BUY
Good yield. He has seen some slightly distressing numbers in North America from telephone companies. DSL is starting to shrink indicating the phone companies are starting to lose customers.
TOP PICK
Yield of almost 10%. Fairly inexpensive. Doesn't expect the dividend to be too different from the current distribution.
HOLD
Good management and good asset base. Decent yield.
DON'T BUY
The substantial payout ratio of 84% doesn't leave a lot of room for declining cash flows to cover distributions. Very good business and operation but not sure where the growth is going to come from. There are also more competitors coming in. Wouldn't look at holding this for the long term.
BUY
Very conservative company. Has been caught up in the volatility of the telecom sector as well as uncertainty of the future of its largest shareholder BCE. Generates great free cash flow. Good levels.
TOP PICK
One of the few income trusts that are really solid. When they convert back into businesses, his suspicion is that this one is really cheap. Good 10% yield. Very well run business and very stable.
HOLD
Has probably been one of the best performing telecom stock. Pretty steady performer but wouldn't put new money in.
COMMENT
60% controlled by Bell Canada (BCE-T). Likes it because of the income. Its future is a bit cloudy based on when the Teachers Pension takes over BCE.
COMMENT
Doesn't see any material change if the BCE (BCE-T) deal goes through. 9.6% yield. This would be one for an income portfolio.
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