BCE Inc. (BCE.TO)

Good company, good dividend, good yield, solid record, and the stock has come off almost 10%. This gives you a yield and a tax dividend credit that you can’t get anywhere in the fixed income market. A safe stock. Dividend yield of 4.76%. (Analysts’ price target is $62.39.)

A great story. Trading at 16X earnings and has a great dividend yield. They’ve spent a lot of money on the capital expenditures side moving fibre to the home. Thinks there is good upside. Data is doubling every 12 to 18 months, and he sees that as a great opportunity. Owning media and telecom seemed to work well together.

This has sold off on the belief that interest rates are going to rise, so now would be a good time to initiate a position. For the last 7 years, every time people have talked about interest rates going to rise, they haven’t. He suspects this is going to be another one.

Although the takeover of Manitoba Tel (MBT-T) has gone on for 5 or 6 months, there is no reason to think that it will not go ahead. This is a good company. Given that he thinks there is going to be fairly fast growth in the US, you don’t want to be in things that are interest rate sensitive as the telcos are. You might be better buying a bank.

All these income stocks have trailed off a little bit since the election. It was a time for a bit of a breather which presents an opportunity to buy. Cord cutting will increase bandwidth demand. He feels average revenue per wireless user should increase with content delivery.

On the basis of growth, valuation, and where they are positioned in wireless and wireline, he would rank them as Rogers (RCI.B-T), Québecor (QBR.A-T), Telus (T-T) and finally BCE.

A 3 year chart shows it is in a longer term uptrend and is bouncing off the trend line. You need a one year or longer time horizon. $56-$57 is a good entry point. Dividend is currently 4.79%. (Analysts’ Target: $62.39).

Why are Telecom stocks down 3%? You need to look at the global telco space. They are all down, and this is on the expectations that we are going to see higher rates. The dividends are growing in the segment and that is going to continue, but we are at a point where secular rotation is going to start to push funds into other areas of the economy, and are going to take capital from areas that have worked. He wouldn’t sell if you are looking for dividends, but if looking for capital gain, this may not be what you are looking for longer-term. Great story and the dividend is safe.

Generally, company dynamics are looking decent. A mature industry, but they are getting a bump up in wireless subscribers. The Canadian economy is doing okay, slightly better year-over-year. On the negative side, there is a large capital expenditure build, where they are building fibre optics to the home in the greater Toronto area. He worries they are spending into a bit of a vacuum on pricing. TV pricing is what anchors the relationship, and that TV pricing is increasingly being cut. That doesn’t impact their ability to pay the dividend, maintain it, and probably to increase it.

Bell Canada (BCE-T) or Manitoba Telecom (MBT-T)? Manitoba Telecom is in the midst of being acquired by BCE and are just waiting for government approval. He wouldn’t play an arbitrage on this.

Telecoms? She likes Telus (T-T) and BCE (BCE-T) equally. They are both incredibly well-managed.

He thinks it could pull back to the Mid-$50s. You would have a flat return for a year and that is as much as it pulls back for this year. There is only 1 or 2% growth.

(Top Pick Oct. 15/15, Up 12.57%) An excellent core holding. He loves it. It has rolled over a little bit like all the other defensives. He thinks it will find support. If it gets below $57 he would get concerned.

Is a good dividend payer. All the big dividend payers have pulled back so this is not the best time to step in. Sumer months are good.

Investing in a Canadian company you get the dividend tax credit. In the US you get a 15% withholding tax. Continue to hold telecoms in Canada. BCE-T has come down, but he would continue to hold it.