BCE Inc. (BCE.TO)

This has held in pretty well as all good dividends paying stocks did. The big issue with big telcos in general is that half their earnings, interest, tax and appreciation comes from their wire line business. That business is dying slowly. Their offset to that has been acquisitions, boosting their dividend greater than their earnings through tax strategies, their mobile strategy and their forays into advertising and sports content. This is just above investment grade and he would not call it a safe dividend stock.

It takes time for companies to merge operations after an acquisition. Typically BCE-T does well this time of year, but not this year. It seems to be forming a bit of a base here, but wait for it to move more above that base. There is no compelling reason to get excited right now.

(A Top Pick June 12/17. Down 2.8%.) He owns this because it is a low beta stock. Also, telecoms can do okay, particularly in the latter part of the summer. There is very little danger and it pays a very good dividend.

Sell Rogers (RCI.B-T) and buy Bell (BCE-T)?A really interesting question, particularly with the 1^st salvo we’ve had from the trade negotiations were the US has said that they want to have greater access to our telecommunications industry. In that case, he’s not sure you want to own any of these. His preference would be with this one, but only because it is dominant within the wireless industry. Also feels it would be a little more secure in the longer-term.

(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.