Paul Harris, CFA Telus Corp T-T COMMENT Nov 26, 2024

He actually likes both. Looking at price action over the last few days, these names have held up rather well. Sector's bottomed out. Both names have high dividend yields, tremendous FCF, lots of opportunity going forward to buy back stock. Worst is over for the sector, phenomenal opportunity.

With BCE, you should anticipate a dividend cut; this would be fine with him, as it will free up $$ to reduce debt and possibly buy back stock. If that happens, it would be a positive rather than causing the bottom to fall out of the stock. Investment community wants it to cut the dividend, reduce debt, and undertake a better allocation strategy. Still throwing off significant cashflow. Too early to say if it overpaid for the Ziply acquisition.

Telus has done better, with better growth. Invested in other things to diversify its business. 

Tower sales gave stock a bounce. Large capex business. May be forced to cut dividend. CRTC always makes for such a difficult environment to operate in. Great management, good job diversifying.

Challenged sector for several years, mainly since interest rates started rising. Bond proxies that are pretty compelling when there's financial repression as we had from 2008-2022. You have to pick your spots. Likes Telus, but not the rest.

Telus dividend is more secure, yielding ~7.5%. Continues its cadence of dividend growth by 3% twice a year. Price war is abating. Selling non-core real estate and monetizing old copper.

All telcos are challenged: balance sheet, capital intensive, higher interest rates, competition, less immigration, need to pursue asset sales.

Great dividend name. Best of the bunch. Is this the very best stock to buy right now? No; there are others with more visibility and less hair on them. But this is a good one for the Canadian dividend tax credit. You never know what you don't know, and things can change for the better quickly.

It remains his favourite telco. Very well-managed. Have increased their dividend 27 times. Selling some of their infrastructure will be good to reduce debt. Still likes it.

Buy at this level or definitely hold on. He owns Quebecor and this. Like this. Well-managed. They were early investing in their infrastructure, and that capex cycle is coming down. This generate lots of free cash flow to increase their dividend each year (unlike BCE or Rogers). Telus has undervalued assets including in the health space, tech and real estate; can monetize these. Pays a great yield.

He invests in Telus bonds instead of the shares. Credit is very good, still investment-grade. Marketable assets. No issue with default in any of the big 3 telcos.

For the equity side: not a lot of growth, price competition, CRTC always making new rules. Big dividend is enticing, but not for him.

Everyone who wants a cellphone already has one. The market is not increasing. Not expensive. Trying to sell towers in the States, which makes sense. Core business is not growing the way it used to.

Still believes in it as a long-term investment. Tailwinds include decommissioning their copper infrastructure, selling some of their real estate and they are past the fiber-inflexible point in their investment. Cash flow growth looks good for years to come and should support the dividend. 

Below 200-day MA; also moving below 200-week MA, which is trending lower. Need interest rates to come down for this sector to do well. Yield is 7.64%, and that dividend could ease going forward. Tough space.