Orange SA (ORAN)

AT&T (T-N) or Orange (ORAN-N) for a retiree? In this environment, which is going to be a relatively low growth one, you need to have a company that pays and increases dividends. Both these companies can continue to do that over the long-term, and are the kind of companies you want to own. Owning both will benefit you for the long-term. However, AT&T is slightly cheaper and the US doesn’t have as much competition as Europe. AT&T has the better dynamics right now.

AT&T (T-N) or Orange (ORAN-N)? He doesn’t know about AT&T, but does know this one well. He is maintaining his $28 target. It pays a lovely dividend. They are in a very competitive space in France. They are also in Spain and a number of other countries. Seem to be doing the right things in terms of expenses.

Just reported very good results. Pays a lovely dividend and is a leader in its field. A very, very competitive marketplace in Europe, but they seem to be doing a good job. He is happy to hold this for another 50% gain, and possibly more.

Just reported results and they were alright, but nothing to write home about. The company has been retooling and cutting costs. It is a leader in France, which to him is very important. They pay a very handsome dividend.

Pays a nice enough dividend. He will sell at $27+. He needs 100%+ upside for him but his partner bought it. He is not impressed enough with the upside. The revenues have been coming down but they say they will go up again. They have cut costs and are leaders in the market. He is happy to collect the dividend.

A French headquartered telco that also has significant operations elsewhere in Europe, the UK being a key secondary market. European telcos have been one of the best performing sectors year-to-date, because that is a business where the regulatory regime had been quite averse in terms of really cracking down on things like roaming charges, etc. This really, really depressed things like return on capital, probably below costs of capital. Despite really attractive dividends, European telcos have been poor performing stocks until about the last 6 months, where regulatory winds seem to be changing in Europe. He can see how shares could continue to perform well. (See Top Picks.)

Not the type of name he invests in as a growth manager. But it pays a decent dividend. It is a good quality company. It is probably going to do well with interest rates being so low. This is a utility effectively. The competitive and regulatory environments are benign. It has not been the best place in the past 12 months, but he thinks it will have a bit of a recovery.

He thinks this can go to $27-$28 plus. This was formerly France Telecom and is the #1 player in France, which is very competitive. They are also Spain and Poland. It looks like they are selling off their EE operation that they hold with Deutsche Telekom, and it looks like they will get about $20 billion for this. If they are smart, they will use that to pay down some of their debt.

There have effectively been legislation changes throughout all of Europe. For 10 years prior to these changes, the regulators in the telecom sector wanted to drive down the costs of mobile phones. For the last 10 years, the telephone carriers had no capital to put into the fibre buildout, so the networks are lagging relative to North America. Regulation changes are going to allow them to increase their billings in order to build capital to cover fibre buildout. All of these companies are very interesting to look at right now.

Bought this a couple of years ago and has got about a double on it. He also has the dividends they pay. The only reason that he would think to sell it in 2015, is if it hit his target price of around $28, or if something went dramatically wrong with the company. A very competitive marketplace. They operate in France as well as Spain and a number of other countries. This is a leader in the field. He is happy to just sit and collect the dividends. 2.8% dividend yield.

On European telcos, he thinks the story is that the European regulators were trying to contain or depress the cost of having a mobile phone. They are now allowing rates to move higher, which will be a stimulus for moving wireless capX to be spent into the markets. Thinks the performance for them is going to be better. Likes the story, but prefers Vodafone. Dividend yield of 2.8%.

Although they cut the dividend, it still pays a fat dividend. It’s a leader in France and is in Spain and Poland and other countries. The competitive framework in France is very, very difficult over the past while. He doesn’t see that getting easier, but at least this one is a market leader. Feels that this could still double from where it is now.

(A Top Pick Aug 12/13. Up 60.86%.) He keeps riding this one higher. His Initial Sell Target is around $28. Revenues went down about 4% last quarter. Income has gone down, but they are still making money. There is a lot more competition in their space. France is the #1 market, but they are also in Spain and a number of other countries. Cut their dividend this year, and the stock price went up. He still sees a lot of upside.

The overall telecom sector in Europe is really suffering and there has not been a lot of consolidation in the European market. They need to see more consolidation. It’s a very high cap business and they get hurt because they have limits on their ability to have better pricing power. Stocks are not expensive, but you are better off in something else. There is a huge battle in France going on where there are smaller companies that are putting a lot of pricing pressure on the incumbents. They have to face a lot more CapX.

(A Top Pick June 28/13. Of 77.17%.) Has a target of nearly $28, so has a long ways to go. Pays a nice dividend. A leader in the French telecom market. They are also in Spain, Poland and Africa.