Bell Aliant (BA.TO)

Likes the telecom group. On this one, the dividend is probably safe in the short run but this one is an under performer in the group. He owns Verizon (VZ-N) as well as Telus (T-T). Likes Telus because about 3 years ago they said they would raise their dividends twice a year for the next 3 years, and they did it. They have now reiterated this for the next 3 years but at 10% and they have great cash flow growth.

A more defensive name in the telecoms sector. Have a lot of rural areas which is more defensive. There is always a potential takeout by Bell Canada (BCE-T) the parent. Not looking for a lot of upside but the dividend is safe. Payout ratio is a little bit high for his taste but this is safe for the next couple of years.

Not much capital growth but the dividend. People are worried about the dividend but he thinks it is quite safe now. You should see 10-12% rate of return. A lot of people think Bell will take them out.

(A Top Pick Feb 17/12. Up 6.07%.) Bought this one for the dividend. Have a good market in the Maritimes and into northern Ontario. Have really been fast in putting fibre in. Feels the 7% dividend is quite safe and there’s always a chance that Bell Canada (BCE-T) will buy them back in.

(A Top Pick Jan 20/12. Up 0.27%.) Had basically bought this for the dividend. People keep thinking they are going to cut the dividend, so the stock rises and falls. Still likes.

7.2% yield. They are spending so much putting fiber to the home. They are gaining market share through that. But paying out almost 80%, so there is a fear of cutting their distribution. But when they cut their CAP-X it will be a lower payout ratio and you never know if Bell will buy them out in the future.

Have a concentration of wireline communications, which is a declining business overall. That’s why there is a lack of growth in the stock price, but has a healthy dividend payout because of the cash flow. They are doing some things in Eastern Canada such as fibre optics which should provide stabilization over the long-term. Would prefer BCE (BCE-T). (See Top Picks)

Recently broke an upward trend and is now trending downward. BCE looks more interesting than BA.

An old-fashioned business in a fast changing world. Globally there are 5 cell phones for every land line. This is not a growth business, it is a yield play only. If you want a low growth, sort of steady Eddie dividend payer with a slowly declining revenue, this is fine.

Trading at a pretty high multiple. Dividend is safe here for the time being but they do need some capital because they are pursuing the fibre to the home. Mostly a yield story that makes it interest-rate sensitive.

There is always the susceptibility of the dividend being cut because they have a 90% payout ratio. Numbers were decent last quarter. He likes their fibre to the home build-out and thinks they will steal market share away from East Link. Also, they own the rural assets in Ontario and Québec. Technology is coming where they are going to have the new build-out of Wi-Fi which is going to help them lower their cost base. Feels the dividend is sustainable.

(Market Call Minute) Someone is going to take it out and meanwhile you get a decent yield.

Bell’s (BCE-T) Astro Media deal is most likely dead and it makes sense that they might take over the balance of this company. This is been talked about for years. Not the most attractive growth business. Good free cash flow comes out of it. Have the old wireline plus wireless and Internet but they are in a fairly small market. Decent yield of about 7% which they can maintain. (See Top Picks.)

Since the CRTC scrapped the Astral deal, do you think a takeout of this company will be fast-tracked now? It won’t happen soon because Bell (BCE-T) is going to appeal the decision. There are analysts who think the dividend will not be covered by free cash, so they are going to have to borrow money to pay the dividend and hope that their business skates on side. Thinks that BCE will wait it out.

(A Top Pick Oct 21. Up 3.57%.) Not a lot of capital appreciation but a healthy dividend. Good solid cash flow producer. Into fibre optics in a big way.