BCE Inc. (BCE.TO)

This is a good business, but he has a lot of other areas to put capital to work. A very slow growth business. Pays a nice dividend. Trades at around 8.5X EBITDA, which is not exactly cheap. If it ever got down to around the $50 range, it might be an attractive entry point.

He’s been in the process of reviewing his holdings. It is going to grow reasonably well, but his biggest concern is in terms of subscriber growth. It is not doing quite as good as in the past. Has a reasonable dividend and is well managed. He is likely going to be selling this in the very near future. Getting close to being fully valued. His target price is $60.

Just increased their dividend 5%. All the Canadian telcos have seen better wireless subscriber additions recently. The adoption of secondary devices, immigration and demographics is combined to increase the growth rate of these companies. If interest rates increase, there will be a broad macro trade to sell the telecoms and utilities especially, and that’s when he would start looking at this.

This is one he holds in his income platform, but it also suits his growth platform. The chart shows a long upward 3-year trend line, and it has come down to the lower part of the trend line again. He likes the stock from a long-term trend perspective. It also gives a good dividend. (Analysts’ price target is $60.80.)

Took some profits on this some time ago. Good management. They’ve recently come out with quarterly earnings and missed on a couple of spots, but they increased the dividend. You basically hold this for the long-term growth, and the nice fat dividend. 5%+ dividend yield right now.

This has pulled back compared to its peers. Part of it has to do with the media division, where earnings have been choppier than what people expected. When you are looking at telecom stocks, it always seems to be a race or displacement in how many wireline customers are cutting off and how many new subscribers are being signed up, etc. His concern has more to do with the whole industry. Wireless is fine and the future of cell phones is fairly secure. Beyond that it is all going to Internet protocol, and there are so many alternative means by which to get Internet reception, but he is not sure what kind of industry structural changes we will see, particularly over the next 10 years, as well as the impact on these companies.

This has a place in a portfolio, but you have to make sure you are buying it for the right part of your portfolio. If you are looking for some real growth, this company is not where you want to go. You are paying for an established business, high quality, large market share, so it is difficult to get a 10%-12% return. The flipside is that it has a very low beta and has a great dividend.

This has a high cash ROE and a relatively low cash PE, but also pay out a large percentage of their earnings in the form of dividends. Feels this may struggle in terms of adding new subscribers. Prefers Telus (T-T), which will be doing some interesting things away from just the traditional cable and cell phone users.

During the last couple of weeks, he is starting to see interesting technical signs that the stock is starting to show some pretty good stuff. Yesterday it broke above a small trading range. Technically, he is starting to become more positive. On a seasonal basis, the stock normally does OK this time of year. The next couple of months is a good time to own this, but from a seasonal point of view, you may want to look at around the end of February for an opportunity to go into the more economically sensitive areas that will probably outperform this one.

Telecoms fall in that defensive space of higher dividend, lower volatility characteristic. Canadian telcos have started falling off with interest rates moving higher. The positive on this is that you are getting a very, very nice rich dividend, and it will continue. From a capital appreciation standpoint, it will be somewhat limited, as it got a bit pricey and money is flowing out of telecoms and into energy, materials and financials.

T-T Vs. BCE-T. It is West vs. East. He had to decide when to move toward growth. That means getting rid of some of the steady eddies. He owns none of the telecoms right now. Multiples are extremely high. T-T ranks number 1 with customer service and the ability to generate cash flow. Both are great dividend growth companies.

This is currently at super high levels. If he were buying this, it would be for a trade. He would need to see this get back a little bit higher before he would care. If you are holding it for dividends, that’s great, don’t sell it. If you are holding it for a trade, it has some work to do at current levels, which are high.

(A Top Pick Nov 14/16. Up 3.09%.) He sold this at around $62, and then noticed it had come back to its trend line at around $58 and bought it back. It is still in the Buy zone.

They have re-executed the company and done well at it. They have a safe yield that grows and should continue to do so. It is a low risk investment. He prefers RCI.B-T and T-T given the valuation and growth prospects. The sector is vulnerable to rising interest rates and so is not a preferred sector.

The government has just declared the Internet as a basic service, which will take from the bottom line, but doesn’t think it will be that huge. The rally this year really hasn’t come into play for the telecom companies. At this price level, it is a very attractive entry point. Don’t expect huge growth from this. It is trading at about 18X. There will be some earnings growth. Increasing interest rates help them on their pension liabilities.