Verizon Communications (VZ)

US’s largest cell phone provider. He likes the sector. Growth in North American wireless has slowed down quite a bit. We are reaching a relatively high level of penetration, and there is not going to be as much growth as there has been over the last 10 years. However, these companies continue to generate a lot of free cash flow. They are great businesses, and he likes to buy the market leader in this type of business. From his perspective, this company has the best network, so they get the highest value customers.

The only reason to buy this is because of its very high dividend. After 20 years, you are back where you started with this, but all along the way you have collected a good dividend. This company has some massive issues, because the costs for cell phone usage keeps coming down, and that is not a good model when your revenues keep coming down. Their debt was downgraded and is now rated as a BBB. The dividend is safe now, but someday you worry whether that will continue. He likes dividends, but he also likes dividend increases.

An interesting play on Netflix. It is a defensive play. He wishes Rogers would put as much money into their infrastructure as VZ-N.

This gives a comfort and sense of security, and is a service we all use, especially in the US. They are large and pay a big dividend. However, the stock chart shows it hasn’t done much for a while. It has really gone sideways for several years at around $50. Other than the dividend, there hasn’t been any real capital appreciation. They are going through a transition. They were a telephone company initially, then a mobile cell phone company, and now getting heavily into media and transitioning once again. With their acquisitions, there is risk. If you own, he would suggest switching to Canadian telcos instead because of the dividend tax credit.

A very unique company. They’ve done a deal with Yahoo (YHOO-Q) that is closing in the next little while. Spent a lot of CapX putting fibre to the home, and are going to get the benefits of that over the next several years. You’re not going to get a huge upside, but you can see them slowly grow, and get 8%-10% in returns. Great dividend yield. Relative to AT&T (T-N), it doesn’t have the CapX spend. There may be a time when they feel content becomes very important and they need to do a deal, and that is something you should watch for. Content companies tend to be much more expensive.

From 2014, the chart shows this really has been fairly flat between about $44 and $51. Currently, it is at its support level, and he would be a little concerned if it broke down below this. The chart shows this year a series of lower highs have taken place. Typically telecoms do well in the fall.

We have seen the pull back across the biggies. They are now trying to get into content. Investors are trying to decide what it is they own. There is a large retail investor base in this stock and it no longer looks like it will be a utility stock going forward. The 4.9% dividend may not be reliable in the long term, although there is no stress on it. The content business is not historically that reliable to pay a dividend out of.

Even though the street does not like this, it is a name you might want to look at. Trading at 13X earnings. They were basically only $.01 under earnings, but missed quite a bit on the revenue side. He thinks that is going to change.

This is a stock that made investors a ton of money in the 90s, but hasn’t made any money since. The problem is that they had to keep cutting prices, and that doesn’t seem to be getting any better. It looks like their revenue line keeps getting smaller. Dividend yield of 4.6%.

This company is facing some challenges such as increasing competition from the wireless side. A very competitive business. A lot of the smaller carriers are being fairly aggressive on pricing. He would suggest selling your holdings and try to get in with at least a 10% lower share price.

If it gets back to $46.81 it would be fantastic to buy it there. $46.77 is the model price.

She likes it. It is one of her defensive stocks because of the high dividend yield. It has stable growth, but we have not seen a huge amount of cellular growth. It is about international growth which is slowing. She likes the dividend yield at 4.7%, however.

They reported earnings that were disappointing. They moved into wanting to create a wireless footprint and sold their wire line business. They are actually losing revenue per user. He owned this until 6 months ago when he moved away from the more defensive companies. He does not recommend waiting for it to recover. It has always been known as a high dividend payer, but if they purchase very large properties then the dividend could be at risk down the road.

The kind of stock you own for the long-term. He wouldn’t get shaken out because of anything to do with interest rates.

AT&T (T-N) or Verizon (VZ-N)? Chart shows that AT&T has outperformed by about 10%. Within the sector, there is lots of news. One way to try and resolve this is to start a position in iShares Trust Dow Jones U.S. Telecom Sector Fund (IYZ-N), and you are probably going to see procyclical names again. The sector lagged a little, and as we get past the middle of the year this area should probably pick up.