Bell Aliant (BA.TO)

Should caller switch into BCE? BA pays out a huge portion of its free cash flow. It is more bond-like. BCE has so many more businesses. BA is fiber to the home in rural areas. He would own it for income and as a bond substitute. Some day it will be taken in by BCE. It is totally safe. He sees them as two very different investments.

The dividend is sustainable. Had slightly weak numbers last quarter. Their big play is building a fiber to the home in the East. At the end of this year, they will pass the 1 million homes mark which is incredibly competitive in that area. Had tax issues last quarter along with pension obligations and are now drilling through their 130% payout ratio, but this really drops dramatically next year to around 85%. (See Top Picks.)

Sold because he felt there is no real upside on the stock. The dividend is safe. Doesn’t think BCE will find it important to own the rest of it. All you get is the dividend. It’s not a bad company if what you want is the dividend.

This goes through a cycle. If gets down under $26 and then it will run up closer to $27-$28. 44% is owned by Bell Canada (BCE-T) so they would not like to see that 7% dividend cut. Not a bad yield for a telecommunication utility.

(A Top Pick March 28/13. Up 7.62%.) Held this for the dividend and expected it to execute a little bit better. Didn’t see that happening so he sold the stock. This is really going to give you the dividend without upside on the stock price.

A yield only, no growth or multiple expansion. You can go to energy companies for yield. Would prefer a bank.

Just announced they were planning on investing $4.8 million to expand fibre optics capability in Newfoundland. Thinks investors do not like them spending any money as they view them as a quasi-utility. Probably just going to go sideways. Yield is reasonably high. Not much growth. He finds this uninteresting, although for yield he prefers it to a utility.

Dividend safe. Looks at companies that have a good prospective of a growth of dividend such as BCE or RCI.

(Top Pick Feb 28/13, 6.71%) Not enough growth. No longer thinks BCE would want to buy them out.

There are some challenges. They spent a lot of capital to build out the fiber network. Pay a nice dividend and there is some concern that it might have to cut the dividend. Management team has stated they don’t intend to do that. The company still intrigues him. Thinks the spending is almost complete.

Stock has certainly underperformed of late. Feels the dividend will remain pretty secure. If you own the stock, you might want to continue to hold as he feels there is a potential for Bell Canada (BCE-T) to acquire the 56% that it doesn’t own.

(A Top Pick Jan 21/13. Up 5.86%.) Numbers came out weak. Has bounced back a little. Very competitive market. They are 40% owned by Bell Canada (BCE-T) and have just announced they are going to spend a lot of CapX to get through 1 million homes putting through fibre.

Starts to look very interesting here after the down draft recently. Balance sheet is okay and dividend is safe, even if over 100% as it is well broadcasted. There is always the possibility that BCE buys back the balance of BA. He is doing his work. T-T looks to be very well positioned with guidance of growing dividend annually. Investors will do quite well in this space with dividends. He Prefers T-T, though.

Have done a really good job. One of her concerns initially was the lack of growth opportunities. In the last couple of years, they have started rolling out their fibre to the home network, which has really increased their ability to grow their subscriber base. They are nearing the end of that fibre to the home build and she feels the company is in quite good shape.

Sold his holdings because he had worries that the dividend could eventually be in jeopardy. Likes all telcos, it is losing landline customers and doesn’t have wireless to replace them with. Trying to make up for that by having fibre TV installed in homes. That is a very expensive proposition. So far they have done not bad with that, but their forecast for 2014 was somewhat tempered. Would leave this for people who have a higher risk tolerance.