AT&T (T)

This, along with wireless carriers in the US, has been a little weak recently. The concern is the continued heavy subsidization of new handsets. Feels the wireless carrier space is going to remain very competitive. The years of AT&T having exclusivity and getting very large share gains, is sort of behind them. This is fairly valued without a tremendous amount of growth.

Bank of America (BAC-N) or AT&T (T-N)? When you are valuing stocks, you have to look at the long-term free cash flow that a company can generate. In the short term, you are probably better with this one. It depends on what you want in the stock. This will be much more stable. He would prefer this because he is much more cautious on banks in the short term. However, on a 10 year term, you would probably make more money on Bank of America.

Is there a possibility that they would acquire Vodafone (VOD-Q)? That would be a very, very large acquisition for this company, and would be a complete game changer. There would have to be equity involved. This might result in a revolt by AT&T shareholders. Stock is trading at a discount because they are faced with 2 unfortunate situations in the wireless market, (which has the rich margins). 1.) A lot of competition from T Mobile and 2) putting fibre in the ground and going after the cable/video market, this is very expensive. Dividend yield of 5.5%.

He owns BCE-T. Bought after the failed acquisition so the cost price was $28. The challenge is for new clients. Telcos are a GDP grip. The US economy is getting ready to turn the corner. The dividend will grow. The potential of an interest rate increase will cause the pension funds to eliminate their deficit. T-N will be the first where they will not have to pay a pension amount to employees.

Verizon (VZ-N) or AT&T (T-N)? Verizon dividend yield is 4.25% versus AT&T's 5%. He wants to own dividend stocks that are growing their cash flow, but they don't have to be high dividend paying stocks. Wants to know that that dividend is going to increase. Feels this is a good, safe way to play certain trends going on in the US in the telcos. Also, you are clipping a very attractive yield. Both stocks are good, but focusing on growth opportunities, he would prefer Verizon as the best opportunity.

They spend a tremendous amount of money on CapX, but they have great cash flow. It will continue to pay its dividend. What he worries about is its growth and its competitive position against Verizon (VZ-N).

Payout ratio is around 50% so the dividend appears quite reliable and safe. Feels the dividend is going to grow by mid-single digits over the next few years. Currently it is at 5%. However, the telecom space in general is a bit stretched in valuations. Lots of competition and a lot of things happening. Would choose Verizon (VZ-N) over this as it has a little bit better growth profile with a slightly lower dividend.

Would prefer the US REIT area for US cash income. AT&T has challenges on the wired and wireless sides. They had their day 3 years ago, but now their dividend is not growing. Take a look at cable companies which have more growth.

Have gone through a lot of changes in the last 5 years. The big news right now is the proposed acquisition of DirecTV, which will be a big game changer for them. This is the largest wireless carrier with about 125 million subscribers. The environment is getting extremely competitive and pricing is becoming cut-throat. 5% dividend remains strong and their cash flow is good.

What’s the point of buying this when you can Buy a Canadian company, keep your dividend, and even get a dividend tax credit? He is sticking with Canadian names.

Looking to merge with DirecTV. The whole tipping point is if AT&T can get the NFL network with the DirecTV purchase, it gives them some kind of growth. The dividend is not growing faster than the rate of inflation. Has not been a big fan of this company because they are so big, they are not growing at a quick rate.

Not his favourite. Smaller companies are hurting the big guys. There has not been a lot of growth for them. Prefers Canadian telecoms.

Equal weight on AT&T (T-N), Verizon (VZ-N) and Vodafone (VOD-Q) as a dividend play? If looking for dividend income, why not take advantage of the dividend tax credit that is offered on Canadian dividends? Although you get a dividend on these, from a tax standpoint it is treated as interest. As far as the telcos in the US are concerned, is that they distribute a lot of cash which generally run at the 4%-5% rate. AT&T is a slower grower. Of these 3, his favourite would probably be Verizon.

Telecoms are getting a bit stretched in terms of valuations. Decent but watch the valuation.

(Market Call Minute.) This got to twice Book Value and has been having a heck of a time getting any higher. It does have the potential to get higher and has a nice yield, but the 2X book value is blocking it.