Telus Corp (T.TO)

Has a great yield of 4.3% and trades at about 17X earnings. With Alberta having such difficulty with oil, the stock kind of collapsed. Prior to that it was doing incredibly well. They also had very good growth on their mobile side. They are doing a massive CapX expenditure like BCE in order to do fibre to the home. BCE was doing it in massively dense populations so it wasn't as costly. Telus is working in Alberta, and the costs are for more expensive. Looking at their balance sheet, their CapX is going up substantially, but the free cash flow has fallen a lot. They have to get through this, where the CapX starts to go down again and free cash flow grows. He would stay with this.

Historically, stocks like this do very well in the summer on a seasonal basis. We are now outside of the seasonality, but technically, the long-term trend has done very well. It recently broke into all-time highs.

Not cheap, trading at around 18X 2018. Has a pretty high payout ratio around 86%, but sees that coming down. On Q3 their CAP X guidance was lower for the 1st time since 2010. They've laid most of their fibre and have done their footprint, so costs will be coming down. At the same time, there is a lot of strength in wireless and wireline. He models 15% per share growth 2016-2018. In 2020 this trades at a 15X reasonable multiple. He would buy at $46.

Having doubled my money, do I buy more or diversify into something else? A theme that has worked in this market for a long time is dividend growth. This company has been a poster child for years and years. He is not a huge fan of the telcos, because it falls into the camp of the bond proxy like sectors. Within the sector, this has a very high exposure to wireless, and technically the stock looks very, very good. It has just broken old of a 2-year base, and consolidated the breakout, so next year looks quite good.

This has been extremely well-managed. Relative to Bell (BCE-T) it has made great strides positioning itself, not only within the wireless market, but also profitability wise. Has a good dividend history. With a long-term view, this is a good stock to own.

(A Top Pick July 18/16. Up 19%.) Still likes this and is still buying for new clients. A great way to get exposure to pretty much a pure cell phone data wireless business.

This has basically been threading the needle between 2 of his technical break points, and has been doing it for a long time. The bottom side is at about $40 and the top side is at about $54. It has a nice yield, so he would continue holding it. If it sets back to $40, that would be a Buy.

He likes the yield but does not think the growth will continue. Is this the best way to generate 4.2% returns - look to the Top Picks.

T-T vs. RCI.B-T vs. SJR.B-T. He sold T-T last year because of tepid growth and valuation at the top of its range. He sold it to make way for a more cyclical investment. RCI.B-T is the strongest of the telcos. The whole space is expensive.

Has underperformed its peers for the last 2 years. Trading at a bit of a PE discount because they have had rising Cap X, lower cash flow, concern about their dividend payout ratios. They've really been building out their fibre, but believes that is going to reach important milestones in 2018-2019 and CapX is going to start coming down. By mid-2018 they will have completed 50% of their targeted footprint. By the end of 2018 it will be 60%. This should lead to rising free cash flow and multiple expansion. Dividend yield of 4.2%. (Analysts’ Price Target is $48.50.)

He likes this company. On any of the Canadian telcos, you are not going to go wrong owning them. This company's concentration in wireless is quite high, among the highest in Canadian telcos. An area where he sees growth going forward, based on that we are all doing more with our smart phones. The average revenue per user is rising. Valuation is reasonable, trading at 17X. Make sure you are not too heavy in this space. Dividend yield of 4.2%.

He likes this very much. This and Bell Canada (BCE-T) would be his top 2 choices in the telecom sector. If you want to stick a stock away for the next 10 years, his choice would be Telus. He takes his hat off for their buildout of the fibre to the home over a five-year timeframe, versus BCE which is over a ten-year timeframe. Currently they have guidance for a 7%-10% annual increase in dividends. When the buildout is finished in 2020-2021, he thinks they’ll be able to renew that 10% a year dividend growth rate.

There are a lot of moving parts here. Growth in Internet was a bit lower in the last quarter, which is causing a little bit of grief. The earnings results were not well received. He is not as warm on this as he used to be, but would be happy to stick with it.

BCE-T vs. T-T. You are getting bond like returns and in the future they are going to spend a lot on 5G, but won’t get much payback for it. He is weary to buy a stock with a bond like yield. It is a group he does not invest in.

He exited a while ago. It is the most wireless of the three. If you think this is the better growth area then it could be better. A buy and hold strategy won’t get you into trouble.