Rogers Communications (B) (RCI.B.TO)

(A Top Pick Feb 24/16. Up 25%.) He recently took profits, switching out of the defensive telecoms and into more cyclical areas. Trading at about 10 or 11 times enterprise value over EBITDA, a little more expensive than a 10-year average. 3.3% dividend yield. He is concerned their dividend growth rate is probably going to be a little weak at 3 or 4% going forward.

The opportunity here is that smart phone penetration in Canada is still lower than the US. Canadians continue to do more and more on their phones, and which tends to be on the data side. Because of this, average revenue per user is going up. The negative is their lack of ability to raise the dividend. They have a new CEO and although he doesn’t expect the CEO to shake up the landscape in the near term, we just have to wait and see. You can own this in your portfolio and over the long-term you are going to be fine. The dividend is safe, but this is a fairly slow growth business. Dividend yield of 3.5%.

This is down about 13% from its 2016 highs. This is because of self-inflicted stuff. They wrote off the Shomi business they had with Shaw. Hired a new CEO, which he thinks is a good acquisition for them. Also, wrote off the IPTV business, preferring to go with Comcast in the US, so the drain on capital goes away and in the future, they just pay per user. They’ll probably increase their dividend this year, which is the 1^st time in a couple of years. Dividend yield of 3.65%. (Analysts’ price target is $57.38.)

Canadian telecom space is so tightly knit that outside competition coming in has a low probability. You are pretty much okay owning any of the Canadian telecoms, as long as you don’t bet the farm. If looking for yield, this would be low on his list. It is about 3.5%, whereas a BCE (BCE-T) or Telus (T-T) gives into the high 4%s. This company hasn’t raised their dividend since Q1 of 2015. They also carry more debt. He likes what they are doing on the wireless side. Average revenue per user is going up, which will continue.

Not his favourite stock in the sector. He prefers BCE (BCE-T) or Telus (T-T). Has an interim president. An incoming president will be very, very important, having to get along with both the board and family. The family has, and wants, involvement. Chances are the best person for the job is not the son, daughter, etc. Dividend yield of 3.6%.

In Canada, you don’t have a wide choice of telcos to pick from. Smart phone penetration in Canada still has room to grow, which bodes well for them. The average revenue per user is on the rise for all telcos. A lot of this is already priced in, and the stock has started to sell off a little, like all the telcos. It has a fairly high debt level, so dividend growth has not been great, however the share price has moved quite a bit.

The quarter was fine. The wireless side was fine and there is a windfall from the Blue Jays side. He is concerned about the cable side. They are hitting an inflexion point regarding cord cutting. Stay away because the of the cable side.

(Market Call Minute.) This has a high valuation, but you get a good yield, and they are starting to turn the operating division around quite well.

(Market Call Minute.) This is at extremely high levels, but has long term assets to generate cash flow.

(A Top Pick July 10/15. Up 22.54%.) This was a valuation story when he recommended it. It has more debt than their competition, which has impaired their ability to raise the dividend, but with share price appreciation like it has had, he is okay with it.

(Market Call Minute.) All the big 3 are kind of pricey here. Trading beyond their 5 year averages. They all have a more saturated market, but this one is cheaper than most. Their all in-service has been very effective. He likes this.

This got over levered compared to the others and decided earlier this year that it was not going to raise its dividend until it gets its debt down. Investors have not liked that. Doesn’t think investor psychology will change until they start raising the dividend again. There is also a question as to whether they overpaid for NHL rights. In the short term, the answer is “Yes”.

(Market Call Minute.) The cable space has been tough. This one is going through major changes. If you are going to buy telecom or cable, he would probably own BCE (BCE-T) or AT&T (T-N).

They have some issues that they have to work out in the longer-term. The Internet is having a major effect on a great deal of their business, particularly their cable, television and home phones. Good dividend yield of 3.8%.

Telus (T-T) Bell (BCE-T) or Rogers (RCI.B-T)? He owns BCE which he likes. This one has more difficult issues with the cable side. People are worried that they paid a lot for the NHL business. Also there is concern about people cutting the cord on certain channels.