Telus Corp (T.TO)

An extremely well-managed company. One of the best CEOs in Canada. A great business. He would be buying this in the low $40s.

(Market Call Minute) Not her preferred play, but it is an oligopoly.

The economic recovery in the West benefited them last year. This was the laggard in wireless, and then they were the leader in terms of subscriber additions, and now are at the back of the pack. He is waiting for this to get hit on some macro trade with interest rates. He would like to see it down another 5% combined with another dividend increase.

He owns BCE-T. The wireless side has done quite well. They pay a great dividend and expect to raise it over the next little while. You will not see much growth in any of these companies. They want to get fiber in Western Canada. They are getting competition from Shaw.

It is very expensive, as is BCE-T. His model price is $38.76, an 11% downside. As it goes flat, the fundamentals are percolating underneath. Strong stocks go sideways for a long time until fundamentals catch up with them.

Sell? He owns this and likes it, but less than he did a couple of years ago. Because they are essentially only in the wireless space, they are going to need to invest significantly in acquiring spectrum and upgrading networks. It’s a CapX heavy business, and there is not a whole lot of growth in it. A safe name to have in your portfolio, but if looking for some real growth over 3-5 years, you need to go to something like Alphabet (GOOGL-Q) or Amazon (AMZN-Q).

A Western Canadian-based telecom provider. Many years ago they made the wise decision not to get into content. They’ve had a very successful record over the years of paying a dividend and growing it. Over the next couple of years, they will have to pay for some spectrum. Debt has increased on their balance sheet, so they really should slow down their dividend growth rate. They will face more competition with Shaw, after Shaw having acquired Wind Mobile.

(Top Pick Jan 26/16, Up 21.60%) He still likes it, but it is having a hard time getting anywhere. He would not buy it here anymore.

A good name longer-term, but there are competitive pressures with Shaw right now. Thinks their dividend is going to be over 100% of their free cash flow this year due to their heavy CapX. Trading below its five-year average, and lower than the group. Telecoms are pretty expensive here. They have been acting as a bit of a yield proxy. Excellent management team. If he had great capital gains, he would be selling some of this.

T-T Vs. BCE-T. It is West vs. East. He had to decide when to move toward growth. That means getting rid of some of the "steady Eddies". He owns none of the telecoms right now. Multiples are extremely high. T-T ranks number 1 with customer service and the ability to generate cash flow. Both are great dividend growth companies.

It’s a high wire act, and right at the top of its peak. He needs to see it get above that. If he didn’t have any money in the stock, he would be waiting for it to cross that line. If it got down to around the $34 level, he would probably get into it. Until it proves otherwise, he would be a seller here.

This seems to have a lid somewhere in the $45 area. It is really not a trending stock, it has gone up and down like a yo-yo. Currently it is kind of closing in at around the top of the range, and could get near the top of the range or just decline back down to the high $30s. He probably wouldn’t be a buyer at this time, unless you are just interested in the dividends.

A great company, but is in a sector that has a lot of difficulties passing through fee increases, and he wonders if it can grow out of it. He owns nothing in the telecom area.

(A Top Pick Jan 28/16. Up 14.7%.) Had felt the selloff last year was too dramatic. People had worried about what was going to happen in the Western economy. You are going to get an 8%-10% dividend yield over the next few years. Still reasonably valued.

If you own this for the dividend, it is just fine, as they will continue to grow the dividend. The CapX continues to go down, so they will be able to maintain it. If you own for capital appreciation, you are facing some challenges because of increasing interest rates, and potentially more aggressive competition from Shaw (SJR.B-T). A well-managed company.