A T & T US

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If the Time Warner deal goes through, and he thinks it is a big if because of regulatory issues, he wouldn’t buy it here, but would stand back to see how it plays out. If it is completed, it could be very interesting.

It has been shocking in the last number of months. They have been able to sustain the dividend, but her firm was taking profits earlier. They have changed a lot over the years. The business is fine, but the stock is a bit ahead of itself. The dividend has caused it to get a bit ahead of itself.

(Market Call Minute.) She would hold this for the income.

(Market Call Minute.) They have basically camped out on the wire line business. Verizon has gone to the wireless model. Pays a great dividend, so you can’t go wrong as an income stock.

She likes a lot of the very stable telecom companies. Both AT&T and Verizon (VZ-N) look similar to her, and offer similar dividends. Both would be income plays, not a price appreciation play. 4.7% dividend.

Telcos have been performing very well. So long as we are in a lower rate environment, this should continue to perform well.

(Market Call Minute) It has a 4-5% dividend. Take profits if you have owned it a long time.

There is a chase for yield with interest rates being lower for longer. This yields about 4.6%, which is what investors want. Steady growth, so it is a low beta name, especially for investors who are more cautious. Trading at about 14X PE, only a notch away from a 2012 10-year high, so it is getting up there in terms of lofty valuations. Sees this growing at about 5% EPS, so it is a bit expensive.

One of those stocks that everybody is hiding out in, which is why it gets these massive valuations. If Janet Yellin stays away, a big if, and we get some risk taking in the market and some economic growth, he would suggest that there will be a massive allocation trade out of defensive names, and believes that this would be one of those. The new generation coming along is not going to be using phones, so there will be pricing pressures.

A big, dominant, well-run US telecom business. Pays a nice dividend, so if you are a long-term investor, this is usually a good time to buy. Averaging in is a good way to reduce your timing risks.

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 their DirecTV acquisition the most. It gave them a lot of different synergies, expense and additional revenue to wring out. Your biggest risk right now with telecom is interest rates. These companies are very sensitive. Pays a 4.5%-5% dividend yield. This is really a call on rates. If we have low rates, this will continue to chug higher, but if they accelerate, this is going to get hurt.

AT&T (T-N) or Orange (ORAN-N) for a retiree? In this environment, which is going to be a relatively low growth one, you need to have a company that pays and increases dividends. Both these companies can continue to do that over the long-term, and are the kind of companies you want to own. Owning both will benefit you for the long-term. However, this one is slightly cheaper and with better prospects.

Thinks of this as a bond and that is how it has performed. The stock hasn’t done a lot, but has given you a reasonable yield. The majority of their free cash flow is going to that. Post some recent M&A activity, they need to now de-lever, and will probably do so for a while. Don’t set your hopes too high in terms of capital appreciation.

A little above his model price of $34. You can’t go wrong owning large cap stocks. Loves the space.