BCE Inc. (BCE.TO)

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.

He owns nothing in the sector. The nice thing about this is that it is diverse across the spectrum. It has the television as well as the mobile as well as the land lines. He would be more interested in this as a trade, as there are headwinds in the long-term.

He doesn’t own any communications stocks. It is becoming over regulated and more competitive. It is well run and has stayed out of trouble. He does not know how much capital gain you will get but there is a reasonable dividend.

It is one of the sectors that got hammered in the ‘Trump-tantrum’. It is a great time to get in and is one of the best managed companies in Canada. They have done a great job in investing in infrastructure. This is one of the best dividend growth stocks you can have. ARPUs continue to go up.

Part of the fall off is due to sector rotation. People have been hiding out in this for a long time because of the dividends and low volatility. If your goal is to get good dividends and to preserve capital, you can do very well with this.

Has been negative on this for quite some time. Thinks it is worth $47.25. If interest rates start to move up, money is going to start coming out of utilities. Dividend yield of 4.7%.

It sold off a bit recently due to rates moving higher. It is a fairly mature business. It is not attractive enough to him on a free cash flow basis. The dividend is sustainable, however. Don’t move out of it into banks.

Dividend yield of 4.8% is not bad when compared to bonds. People are worried that bonds are going to get to the point where they are going to become competitive to dividend yields. However, there are a lot of arguments to stay in this stock. If held outside a registered account, you get a favourable tax treatment. He doesn’t think interest rates are going to go up that high. Thinks the sentiment is going to keep going against this stock for a while. Pick a target of perhaps 5%-6% and buy when it reaches that.