Global markets have been experiencing a tumultuous couple of weeks, with concerns mounting over an upcoming recession. The inverted yield curve that has only worsened, and has investors on edge. Concerns over the trade war between the U.S. and China have also depressed the market. In such volatile times, investors need to consider risk and look at more stable defensive stocks, such as the phone companies.
Telecommunication stocks are known to be resilient, even during a recession, as people are likely to keep their phone and internet connections. They are utility type holdings. In Canada, they are a virtual oligopoly that gives them further stability and protection. Furthermore, most telecom companies pay dividends with decent yield, so it could be an important place to hide your money and weather the storm.
BCE Inc. (BCE-T)
Previously known as Bell Canada, BCE is a good choice for those looking for dividends yield and growth. It’s a safe haven stock that grows dividends yearly. In a falling interest rate environment, it will continue to do well. It is a good income stock that will perform well since it is part of an oligopoly in Canada.
Likes it. Have wireless, content, broadband. In good shape. Good dividend yield, which continues to improve. Compounds at 5-8%, along with the dividend. Not tremendous upside. Have to worry about costs of 5G, and can they get a lot of gains out of that. More expensive than the US comparables. Stable.
Telus Corp (T-T)
Telus is a strong choice for investors looking for a telecommunication company with good market share and a good yield. They are currently paying a dividend of around 4.7%. They have shown good organic business growth, and have continued to add new customers. They are diversified and is ideal for those seeking yield and safety.
Rogers Communications (B) (RCI.B-T)
Rogers has a good likelihood of growth. They will perform well later in the cycle and is more resilient in a recession, with a low beta. They are one of the most diversified telecommunication companies, with assets in sports, publication and other media.
$64.70 is a low from late August and a bit lower in April. It held in there. Around $69 there is a bunch of resistance. It has had no strength against the S&P since June. We are probably going to come back to the low $60s test.
Shaw Communication (B) (SJR.B-T)
Shaw is going through a long-term expansion, after buying Wind Mobile and other acquisitions. They are also investing into their streaming services. There are some concerns over their capability to grow, since 5G is expensive and they have some debt. It has a controlling interest in Corus Entertainment that is weighing down the stock. They pay a 4% monthly yield.
He likes the acquisitions they made. These businesses take a long time to start to really generate free cash flow. He does not expect huge things in the next few quarters. With a 1 to 3 year outlook, they will start to generate a lot more free cash flow. The will start to pay a…
Cogeco Cable (CCA-T)
The company has done very well over the last couple of years, and has always been held out as a possible acquisition target by Rogers. They are diversifying by buying more U.S. assets. It has good return on capital and has grown very well this year.
Thinks valuations across the board are relatively stretched for these companies. Has some secular concerns when it comes to cable and telecommunication businesses, which have kept him out of it. You are going to see a tremendous amount of cord cutting i.e. consumers opting for skinnier cable packages or no cable package. That could significantly…
Quebecor Inc (B) (QBR.B-T)
A more regional telecommunication company, concentrated in Quebec. They are reinvesting a lot of money into their network and have experienced earnings growth of over 20% last year. They have a high free cash flow that they can redeploy. They have an edge over their competitors in Quebec, so this could be a good regional play.
Videotron 7.125% Jan 15, 2020 Bond. Credit metrics of an investment grade bond. They are the cable providers of Quebec. They have to push their profits up to QBR.B-T, but in the case of any insolvency of QBR, Videotron is made whole. The biggest risk is that they would be the 4th big player out…
Tucows Inc. (TC-T)
The second largest domain registrar worldwide. They were under the radar until last year when they broke out. The stock price has pulled back now, but the company is capital efficient and is expected to grow. They are also active in the reselling of mobile phone services.
Just IPO'd a couple of months ago. Analysts have not yet put out reports. An interesting business model and feels they are going to be able to Blog the latest portion of their business but so far hasn't gotten traction.