BCE Inc. (BCE.TO)

Reached another all-time high today. This is moving more towards content. Made the Astral Media acquisition which is a move towards mobile, and that will increase the wireless data. A defensive name for a potentially volatile market. Yield of 4.33%.

Inflation numbers out of the US is pretty much at an all-time low, and he doesn’t expect it to be rising with the economy softening. All of this translates into no rush for interest rates to go up, so you are now starting to see money go back into the telcos. Another factor that has been working in their favour is the risk of a foreign carrier coming in. Much less today than it was in the past. This company has done a great job at growing their percentage of revenue from the wireless side. In 2007 it was about 15%, whereas today it is closer to 40%. He likes to see this because the wireless space is quite profitable, especially with the increased sales in smart phones.

This is a company that has paid a nice dividend and done well for its investors for a long period of time. He would recommend being cautious at these levels. It has been a definite benefit to the sector rotation that has gone on in valuation. There isn’t a lot of news that is pushing it other than maybe some better synergies out of the Bell Aliant deal they did last summer. Be cautious and maybe take some profits to redeploy them elsewhere in the market.

If you want income, this one is fine. She has been out of the telecom space for the last few years. This and Telus (T-T) have both done well. If she wanted exposure, she would prefer Telus. Her concern was the regulatory overhang.

Telus (T-T) or Bell Canada (BCE-T)? He is not in the telecom space. This is an oligopoly and is pretty competitive. Telus has outperformed this one in the last little while. There is nothing wrong with either one of them. Because there is a good yield on both of them, they might have a bit of yield sensitivity if the bonds do start to back up a bit. Wouldn’t chase these, but would buy on pullbacks. They are both quality companies.

The fact that it broke upwards into a new level is pretty exciting. Through the years, it has had a pretty good run except for a couple of periods of volatility. Some of his indicators gave an “add to it”, which he did today.

Sell Bell (BCE-T) to buy Vodafone (VOD-Q)? From a practical point of view, this is just a call on GDP growth. If GDP increases by 2%, telcos seem to find a way to get 1.8% out of your wallet. If you believe in the continued growth of the economy, this is one that you can buy. There will be some issues when they raise interest rates, but longer-term this is a growth story. 4.6% dividend yield. Thinks a lot of the income names are expensive, but if you have a longer-term view, the dividend is sustainable.

Trend is still very positive for this company. Chart shows a nice little break out. You could see this on the upside to mirror the range that it was in, which would be a little bit higher than current prices.

(A Top Pick Jan 9/14. Up 22.14%.) This may be the best performer of the major Canadian telcos in 2014. Benefits from being a content provider, as well as owning the tubes the signals go through. Bell Fibe has done pretty well.

A core holding and a kind of stock he would like to own in Canada. It is safe and boring and has growth prospects.

Likes this because of their constant ability to grow their dividend year after year after year. Very good stable cash flow generation. This is hitting highs, but is supported by the dividend growth that has been achieved.

Until last night, resource stocks have really been under a lot of pressure. People are worried about commodity prices because of the higher US$, so in Canada people are gravitating to non-resource areas, the smaller part of the market. Areas like telecoms are growing and pay a decent dividend yield, and the valuations are not excessive. It's a logical place to move. They all stick out as relatively good value even though the industry is slowing down. Doesn't feel there is a lot of downside or risk to the area.

(A Top Pick Jan 29/14. Up 4.28%.) 3.35% bond maturing June 18/19. This has rolled down the curve and the price is higher. You get the price higher plus the coupon.

7.65% bond due Dec 30/31? If you own, he would suggest you sell. He doesn't like long-term corporate bonds. You probably have done well on them, but he would like you to have something shorter term than that. You are going to give up income and yield if you sell them and he thinks Bell is going to make it to 2031, but rates could rise in the next year or 2. Long-term bonds are subject to price swings.

3.25% bonds maturing June 17/20. One of the themes in his 3 picks is quality. He is taking cautionary measures to guard against BBB bonds starting to underperform the market. Also, preservation of capital in these very low rates is #1 in his mind.