AT&T (T)

Longer term chart is a little bearish. Lower highs, and lower lows. Possiblity of a base being built currently, but would like to see the stock stop making lower highs, and lower lows. No real sign of a turn around just yet.

There are rumours that this company would be buying Vodafone in Europe and this would wear heavily on their balance sheet. If they don’t do this, payout ratio is about 72% on their dividend. About 5.5% dividend yield.

Within the telco space, he prefers Verizon (VZ-N) more than this. Has a decent dividend of 5.5% but he doesn’t think it is going to grow. In an environment where interest rates are going to move up, that dividend is going to look less and less attractive.

Telecom stocks in general should have done better, because the whole industry did better. Now he thinks the telecom industry has some issues in front of it. Slowing growth, more competition, margins are getting driven down. (See Top Picks.)

If you are relying on this as an income stock, it is probably a pretty good choice. US dividends do not give you the benefit of the Canadian dividend tax credit though. When looking for income vehicles for his clients, he would probably overweight Canadian securities that get a preferential tax treatment.

Vodafone (VOD-Q) or AT&T (T-N)? He would go with this one. His favourite telecom is probably Verizon (VZ-N) which is a little growthier and has a decent dividend with a bigger wireless footprint. This is a good income stock. Got a little pricey but has come back.

Spent most of their CapX for the year building out their wireless franchise, which is where growth is. Since then the stock has moved up to the current range because they are monetizing their towers, getting rid of some fixed costs. Likes the stock, the cash flow it generates and the dividend. Management team is fairly conservative and understand the business well and are looking for opportunities.

Likes fundamentally but likes a lower entry point. He has had success in the past by getting in at around $30 and selling it at around $40. Well-run company. Verizon (VZ-N) has just agreed to buy back their wireless business from Vodafone (VOD-Q), so this has them tied up and they have to spin off some assets. Thinks they overpaid. In this environment, AT&T makes sense because they are trying to expand. Have already put $6-$7 billion to work this year. Generates a significant amount of cash flow. From a dividend/income type company perspective, he likes it at this time.

(Market Call Minute.) May be worth looking at because Verizon (VZ-N) is going to be fairly fully occupied absorbing the 45% of Verizon wireless.

This is an interest sensitive sector. Relatively mature now so they pay an attractive dividend. For an income investor, it is fine to hold. However, if you want the dividend tax credit you’d do better to hold Bell Canada (BCE-T). There won’t be a lot of growth.

Good dividend at 5.3%. Cap-X level is high but there is good cash flow. A very defensive sector. It is going to grow over the long term.

Telecom is your pure interest-rate sensitive area. As we go forward, you have to decide if you want to hold too many of these interest-rate sensitive type of stocks. This one has a great dividend of 5.3%. Growth of the dividend is not going to be tremendous over the years. If interest rates continue to move up in the US, the attraction of dividend yield to investors will begin to wane. He prefers Verizon (VZ-N) a bit more because of its growth profile.

There was a rumour that Verizon (VZ-N) would take over 45% of Vodafone (VOD-Q) and AT&T would take over the rest. That got debunked pretty quickly but he wouldn’t rule out anything at this point. The most likely outcome will be some kind of arrangement between Vodafone and Verizon directly. If you are looking at this company, you are there for the attractive yield. Could be used as a bond proxy.

(Top Pick Apr 16/12, Up 29.35%) Sold because of the Canadian dollar. He is going into the Canadian Telecom space with this money.

North American telecoms stocks have done very well. Expects they will continue to pay reasonable dividends. Not trading at expensive multiples. Not fast growers but has the opportunity to slowly increase their dividends. Good balance sheets. Prefers Verizon (VZ-N) because of their better technology and has spent a lot of CapX, which this company has not done.