Telus Corp (T.TO)

(Market Call Minute.) Great dividend. A good entry point. He likes that it is a pure mobile space, and sees that space continuing to grow. Feels the dividend is safe.

This one is across the country, but it’s biggest assets are in Western Canada. Telecom stocks have all benefited from low interest rates, because they pay high dividends. This stock is okay, just watch out for rising interest rates. He would prefer BCE (BCE-T) because Telus has a more leveraged balance sheet.

This is in a giant channel. Not a trading vehicle to him. Volumes are just ho-hum. The stock stays in a very tight range.

He is less concerned with conditions out west and more with cyclical conditions. People are unhooking from cable. They have good cash flow, buying back shares and raising dividends. There is no growth here, however.

This is a stock that normally does very well in the summer. That is good, because there aren’t many stocks that do well in the summer. The stock has been in a range in the last little while. As it moves above its current trading range, then you have upside potential.

Telus (T-T) Bell (BCE-T) or Rogers (RCI.B-T)? He owns BCE which he likes. Telus has always been a very well-run company. They are going to take apart of some of the wireless business from Manitoba Tel (MBT-T). The issue is that Alberta is very slow, and this may be a good opportunity to buy it here.

They have decent earnings growth and dividend growth. It is trading slightly below its 5 years average. They have some upcoming Shaw competition from a launch they will do. Because they have an Alberta base there is a bit of a headwind. Despite all this he thinks you could buy it.

Like a lot of utilities, pipelines and telecoms, there is not a lot of growth. All of them have done a really good job of squeezing out whatever growth there is, and now there is a little bit of fight on the phone side and cable TV. This has the most Alberta exposure, which is why it has been weak. Longer-term, this one is the best bet.

Telcos have been good at competing cooperatively, a very cozy place to be. Looks at these as free cash flow machines and how much cash they generate. Today they have some challenges. Some parts of the business have structural issues, and they have been very good at managing that. Over time, there are things that have to be monitored, in terms of competitive intensity in things like wireless. Right now it is pretty even, but we are going to have to see what happens with Shaw and Wind Mobile which can tend to be disruptive. Well-run and the dividend is safe. Wouldn’t count on much more than the 4.4% dividend at this point.

RCI.B vs. T-T. There is probably more growth potential in T-T, but there is less diversification. He prefers T-T. He expects the relative outperformance to continue.

If you are a dividend investor, this is a place to put money. This is a telco that will probably do well as oil turns around because of their Western exposure. Canadian telcos have been the beneficiary of lower oil pricing, in the sense that people wanted money out of the energy space and went into telcos. Valuations in Canadian telcos now are about a multiple turn more than in the US. If the Canadian economy improves, you might want to take some chips off the table at that time.

A particularly well managed company. They are continually eating away on the heels of their competitors. He has a problem with their multiple. On the positive side they have a higher dividend. In terms of valuation he finds it hard to justify most of the telecom stocks. He owns just a little of BCE as a lot term for some of his clients.

Trading at a reasonable valuation. Has a little bit more Alberta orientation, but likes the 4.3% yield. This is his favourite in the Canadian telecom space.

It dipped down when Wind was acquired by Shaw. Also, T-T has a larger exposure to Alberta. She does not own telecom right now. She goes other places for yield. T-T has announced they plan to increase their dividend 10% per year going forward.

Lightened up, mainly because of the focus in Alberta. They have done a lot of good business in Alberta, but the stats coming out of that province are not looking good. Until we get the oil situation straightened out it is going to be a tough market area to do well in. Prefers BCE (BCE-T).