BCE Inc. (BCE.TO)

(A Top Pick May 26/16. Up 2.52%.) Sort of lost its oomph for him after he had held it for quite a few years. Sold his holdings at around $60. Telcos tend to be on the defensive side of things, but if a good price came up, he would look at this again.

You recommended using Covered Calls as a Top Pick on June 15/17. What strike price specifically? There were 2 reasons for that recommendation. Had thought BCE had sold off quite a bit with a dividend yield in excess of 5%. Doesn’t think there is a lot of downside in it, and would look at writing a longer-term Call Option. He was looking at it as an income generating strategy. You want to think of the premium from the Call Option as a 5^th dividend that you are receiving. At the current price of $58.25, he would go for a $60 Call Option, which gives you a little upside, and you are collecting a dividend in excess of 5%. The stock is not volatile. If able to sell a $60 Call and go out 6 to 8 months, you will probably get the equivalent of a dividend payment.

This doesn’t have much growth, but has a 5%-ish dividend, so your return is going to be mostly the dividend plus a little bit of capital appreciation. If interest rates go up a lot, this is the kind of stock that will be in a bit of trouble, because the low growth can’t offset where the dividend yield would have to go.

Telecom is more of a defensive space and a dividend payer, so he has no names in this space. However, this is a great name for someone who is looking for income and a very, very stable and reliable income. Dividend yield of about 4.9%. Shares are trading at just over 9X Enterprise Value over EBITDA, which is about average over the last 10 years.

This space generally has been pretty positive. If this got down a little lower, moving the yield to over 5%, it would look like pretty good value. 4.8% dividend yield.

*Covered Call*. This company has very good dividends which they continue to raise. You write a Call, pick up a little extra income on the stock. This is just a pure income play in your portfolio. Rather than buying the bond, he would use something like this. (Analysts’ Target: $62.)

A defensive name, paying a fantastic dividend. He is going to hold it for the summer in the equity portfolio and keep going in the income portfolio. There is a flight to safety in the summer. (Analysts’ target: $62.00).

In the short to intermediate term, this company is fine. The dividend yield is approaching 4.7%, pretty close to 5%, and that dividend is secure. If buying this as a conservative safety element, and part of an income profile, this is fine. He questions the longer-term business models of the telecoms. The Internet is changing a lot of things.

(A Top Pick March 28/17. Up 4%.) The best positioned telco out there. They have the balance sheet and the free cash flow yield. The only ones that are the most aggressive with fibre to the homes. In this low interest rate environment, you are still getting a 5% yield.

A name you want to own when you want to collect a very nice dividend. Very secure 4.7% dividend yield. Good growth rate with the dividend going forward. Shares are trading at about 9.5X enterprise value over EBITDA, which is kind of fair at this time. Regulatory environment for telcos has been challenging and can become more so.

For new clients, he would buy a half position on day one. Isn’t looking for big appreciation on this. It pays a good yield and they are increasing their dividend by about 5% a year. There is a lot of wireless growth, which is good for them.

With rates as low as they are, he is generally positive on the income, however, cautious on the sector because of media content. The real work is around the land lines. Over half their EBITDA is generated from land lines, and he would like to make sure that cord cutting does not accelerate. A large part of the driver on this company is on the income side of things. Sold half his position a long while ago. A good generator of income.

He loves the dividend. The last time he recommended this was when it was $58. It ran up to $63 and is now backing off. If it gets down to $60, this is a slam-dunk. They seem to have absorbed Manitoba Tel without too much trouble. If you want a nice dividend, why go any further than this? 4.76% dividend yield.

A good name for an income investor. It has an attractive yield. Recently closed on the Manitoba Tel acquisition, so there should be some synergies. She has a target price of $63-$64 which will give you an 8% capital appreciation, plus the yield of 4.73%. The dividend will continue to be increased over time. If there is a pullback, the stock should hold in quite well.

A core holding for him, but wouldn’t buy it today. Has had a really, really nice move. It’s been a great portfolio investment, but it is now getting a little toppy. The RSI (relative strength indicator) shows a sense of enthusiasm. As it ran up to the mid-$60s, enthusiasm got quite high. He’d like to see that wane before he took another position. Great yield.