Verizon Communications (VZ)

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.

He sold his VZ-N some weeks ago before the election. The steeper yield curve tends not to be good for Telcos. They are a bit of a bond proxy. They are moving away from the wire line business, which had a higher margin attached to it. Their earnings are flattening out.

Sold his holdings about 2 or 3 weeks ago, because of interest rates being on the rise and the yield curve steepening. That is generally not good for telcos, as it lessens the impact of the dividend. They also tend to carry a large amount of debt on their balance sheet, which is not a great thing in a rising interest rate environment.

The stock has sold off hard, on the back of rising interest rates hurting yield oriented assets. With the potential acquisition of Yahoo, it is creating a pipe of being wireless. They have the files on the cable side and the broadband, and with the potential content through Yahoo, they are creating that end-to-end experience for consumers. Big dividend.

Valuations have come down for the whole telecom group. Dividend is safe. A lot of the recent downturn has been relative to the interest rate. The acquisitions and the debt that has gone on in the last couple of years has been massive. He is warming up a little more to Canadian telcos, which he feels has a little more growth potential.

Market Call Minute. She would hold this one for its yield.

It has fallen along with telecom competitors. It is sentiment over the whole sector. If you have a longer term horizon it is a great company to own that pays a great, safe dividend. They are acquiring Yahoo and will probably acquire others.

He doesn’t follow this closely, but it does meet his ROE criteria. If looking for a stable performer, he thinks it would be a good company. Chart indicates they have come off recently, but have broken out, and he wouldn’t have a problem initiating a position at these levels.

Stability and good cash flow. They are reinventing themselves. Over 70 percent of business is wireless. They have a big Cap–X budget every year. He thinks we will see some decent growth from them. 4.6% dividend.

A US telecom carrier. This would be similar to BCE (BCE-T) and the telecom space in Canada. If you are looking for yield and slowly growing dividends, this is a more defensive place to be. A good name in the telecom space for yield, but defensive. Dividend yield of 4.5%.

The largest cell phone provider in the US. A very, very solid company. Trading at a discount to Canadian telcos. Over time it will do well. Good solid investment.

It does not have a high enough dividend growth for him, but the telecom space has been a big winner. You can buy it at a decent multiple. A solid holding for income.

(Top Pick Sep 19/15, Up 23.59%) He still likes it. It is at his model price. The model price will be up in a year. It has a good dividend.

Telecommunication and utility companies are not prime examples of dividend growers. The projected three-year dividend growth of this is about 3%, pretty low relative to other companies. The dividend is attractive at 4.3%. A good company but you have to be careful of interest rates moving higher and the prospects of them moving higher. You could consider Telus (T-T) which has publicly said they are going to increase their dividend by almost double digit growth over the next several years.

This is coming off a little right now as interest rates trend back up a little higher.