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. Stock has moved sideways. Live sports coming back should increase ad revenues again. Long-term, wireless market will continue to be strong. Likes it for the dividend and transition to 5G. Yield is 6% and should grow by 4-5%.
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.
Best quality in the telecom space. Good, stable cashflow to support the great dividend. TV ads might have been hurt by Covid, but infrastructure remains important with the 5G rollout. Well run, will continue to do well. A close competitor is Telus, but why switch?
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.
It's fine, but not his top pick in the telco space. Low beta. Less of a yield than others. A defensive, work from home play. Some of the bloom may come off the work from home trade, and money may flow to more cyclical parts of the market.
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.
Capital preservation and safety first. Wireless build is going well, gaining subscribers. Patriarch passed away last year, paving the way for a new direction. Collect the yield while you wait for something good to happen. Yield is 5.21%. (Analysts’ price target is $27.33)
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.
Some companies you just have to buy when the chart looks like it's not a good time. Price momentum can tell you something good is happening. Getting rid of data business gave them lots of capital to go into the US, where the big story is, exceeding expectations. Buy it here and tuck it away.…
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.
Pre-COVIC, he saw that tech was going to pop, and now the puck is heading to boring value names, like Quebecor. Has an 11% growth rate and trades at 12.6x 2021. Its a very cheap telco and have a lot of cash to return to shareholders and raise the dividend if they wish. Their wireless…
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.
(A Top Pick Jul 29/20, Up 17%) #2 in the domain business. A cash cow. Steady and predictable. Also have a mobile business and a fibre business. In this environment, expects them to have many more installations and business should boom. Top management. Would buy at these levels.