The telecommunications sector is composed of companies that provide communication through wired and wireless infrastructure. Some companies are considered both income and growth stocks, due to their strong performance, regulatory protection and good dividends.
The latest generation of cellular mobile communications, 5G, is rolling out, and these companies are preparing to offer high data rate, reduced latency, cost savings and energy saving. Innovations like this contribute to the growth and success of the industry.
Furthermore, telecommunications is considered a defensive stock, as the demand remains steady in times of economic stress and subscription plans give a stable source of revenue.
BCE Inc. (BCE-T)
The holding company for Bell Canada group. They’re almost done their fibre to home that will give them more market share. BCE is the dominant player in this space and they pay a 5.5% dividends. They are well managed and are considered a good defensive stock that will weather a recession.
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)
One of the three big Canadian telecom company. They beat subscriber growth and reduced churn in Q4. They’ve increased dividends by 7% and is projected to increase. They have invested in data and are increasing their free cash flow.
Shaw Communication (B) (SJR.B-T)
A Canadian telecommunications company that has extensive fibre optic network that provides telephone, internet, tv, and mobile services. They are expected to get get a good market share of 5G. 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…
Rogers Communications (B) (RCI.B-T)
A telecom leader that also owns media. They pay a good dividends that is expected to be increased. I has organic growth and some say the media assets are undervalued. They have the largest wireless network in Canada and is considered a defensive growth name.
$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.
Quebecor Inc (B) (QBR.B-T)
A Quebec based communications company that has seen earning growth of over 20%. The growth has been exponential and the company is managed well. Their main area served is limited to Quebec, and are investing in their network.
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…
Telefonica S.A. (TEF-N)
An international telecommunications company based in Spain. Revenues rose in 2018, and they are expecting a 2% organic in revenue. They sold their mobile communications assets in some central American countries back in February.
A Spanish telecom company. Very difficult environment. They cut the dividend, which was smart. It gets a lot of its revenue from outside of Spain, though, in Europe and from Latin America. Doesn’t think Verizon will buy them.
One fo the oldest telecommunications company. They have consistently raised dividends for the past 30 years and own 1/3 of the wireless market share in the U.S. They are considered lower risk than their European counterpart.
US telcos are having a tough time. Lot more pricing competition. Battling to get into video. Increasing debt over the years, can't get growth, questionable acquisitions. He's stayed away. No dividend growth from here.
AMERICA MOVIL, S.A.B. DE C.V. (AMX-N)
A Mexican telecommunications corporation that is the fourth largest mobile network operator. Their share price jumped following their acquisition of Nextel’s Brazil operation giving them a strong position in Latin America.
Gaining continus scale. Penetration is still going very strongly, as well as having several ventures in Brazil.
Vodafone Group PLC (VOD-Q)
The United Kingdom’s largest telecom company that offers voice, broadband and data services. Most of their business is in Europe. Due to them being a UK-based company, Brexit talks have negatively affected this stock. They are facing big capital expenditures with 5G but their dividends are considered safe.
VOD-Q vs. VZ-N. He prefers Euro telcos to Canadian. They have room in Europe to add to the bill per subscriber.
Verizon Communications (VZ-N)
They are the largest telecommunications company in the U.S. and operates internationally. They pay an attractive dividends of 4.2% and their balance sheet looks good. 5G infrastructure will make it a good long term story.
vs. AT&T AT&T's 6.6% yield is safe, but the stock is dropping. He prefers Verizon with a stronger stock price though 4.2% yield.
T-Mobile US (TMUS-Q)
They recently launched their home internet pilot in the US for rural and underserved markets.. They are seeking a merger with Sprint on the grounds that wireless telecommunications and cable are coming together. If this goes through, it could see major upsides.
Still margin pressures on business and some slowing growth. Good cash generation. Balance sheet is in good shape so he wouldn’t have any trouble owning this. Thinks that the best growth is behind some of the telecom companies right now.
Sprint Nextel (S-N)
A U.S. telecommunications holding company. They just announced a merger with T-Mobile, and its consolidation is seen positively by experts. Sprint does not pay a dividend.
(A Top Pick Oct 17/06. Up .05%.) When you pick this, there was a tremendous upside to the model price. About a year ago, the fundamentals changed, his model price deteriorated and he sold his position.. His current model price is $19.66, only a 7% upside and he is finding value elsewhere.
China Mobile Hong Kong (CHL-N)
A Chinese state-owned telecommunication company. They have grown their dividends reliably. There is still growth opportunity in China but it’s still a mature business. They have a good balance sheet and is a good long-term investment.
The fundamental story on this is that it is, by far and away, the biggest global telecom company. Doing very, very well. Fundamentally, the Chinese government is trying to regulate, to ensure that China Telecom and China Unicom become much more significant in the market, but taking away some of the power that this company…