Verizon Communications (VZ)

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

Unlike AT&T (T-N), it took a big risk by putting fibre in the ground. They bought AOL and part of Yahoo. Had a joint venture with Vodafone on the wireless side and bought them out. Thinks they’re trying to create a 3^rd stream of revenue from advertising and tie it into their wireless business, and maybe their line business. Trading at about 17X earnings and feels the dividend is safe. You have to see if they can execute on Yahoo. Thinks you can own it and it will do well, but these are the risk factors. Dividend yield of 4.2%.

One of the relatively cheaper telecommunication companies. In this macro environment, he is not keen on being overweight in telecommunications. Most of these are trading at very high multiples. This is one you can hang on to and collect a reasonable amount of income, and not have to pay for the multiple.

(A Top Pick June 16/15. Up 11.49%.) He bought this because it was morphing from a traditional telco wire line focused business into a wireless business that will become more than the telco. Pays a 4.4% dividend yield. Still a Buy.

Verizon (VZ-N) or AT&T (T-N)? Both are good companies and you are getting a nice yield. You probably can’t lose with either of these.

Likes this. It tends to trade in the $50 range. Not sure you buy it for growth prospects. You buy it as a stable reasonably valued telecom with a good yield of 4.5%. Scores in the top 20% for price momentum. Holds up well in bad markets. Valuation is not bad, especially for a telco. Trading at 6X EV to EBITDA and at 12X PE.

A great company. The Telco sector is a tough place to be because there is almost no growth. You will get some increase in dividend.

Large wireless telco with about 70% being wireless This is often described as a safe place in the market, because of the high dividend yield. When you look under the hood, you are seeing a company that is really innovating. Recently sold their wire line business in California, Texas and Florida. They are basically taking a telco and becoming a content delivery company delivering data, voice and streaming video. They produce a ton of cash. Dividend yield of 4.4%.

The CEO made it clear they are on a cost cutting rampage and it should add to the bottom line. He prefers Canadian names because the barrier to entry is higher and there is less competition. In the US he prefers AT&T.

This has a pretty good dividend yield and a history of increasing its dividend. Companies like this deserve to be held for the long-term. If you sell your holdings, you are going to take the capital gains hit, and immediately have to pay some money to the government.

Telcos as a whole are very defensive. In this kind of volatile environment, they have held in very well. When they reported, their numbers were decent. They give an attractive yield.

Looking at US telecoms, there is good news and bad news. The good news is that you are getting big, fat, juicy dividends. The bad news is that the stock hasn’t really gone anywhere. Prefers Canadian telcos. Although the dividend yield might be lower, on an after-tax basis it becomes more attractive.

The US not only has much lower rates, but have companies that are making money on the lower rates. Thinks that in Canada there will be a lot of “cut the cable” behaviour. This company is competitive. Dividend yield of 5.05%.

Reinventing itself. It bought the minority interest of the wireless business from Vodafone (VOD-Q) a couple of years ago. Sold a lot of its wireline business to Frontier, so it is really committed to the wireless side of development, which is a very, very big growth area. Yields about 5%. Be patient and it will do well over time. Not expensive.

The US telecom stocks have been real laggards. The Canadian telecoms look interesting, but now the US ones look better. Good dividend, but the long term growth has slowed down. It is a great cash flow generator. These telecom providers will always be well positioned. 5% yield.