Q: My PA wants me in telecom. I had Telus but it dropped heavy and I harvested losses, investing in BCE only to continue down. I realize higher interest rates are a challenge for telcos and utilities. It there a case for any of the of Canadian telecoms? I have a long term investment horizon but do like safe dividends. Are the telcos dividends "safe"?Should I hold BCE or flee for another company, even in the US. (I have VZ, also in the down elevator, bigly). thanks, al
5i Research Answer:
The sector has been ugly, but it can be worse in the US. There is more competition in the US and price wars are constant. We would not be overly worried about T/BCE's dividends. Dividend 'growth' is likely to slow but we would be shocked if either chose to cut its dividend at all. Sentiment is very negative right now, which can set up a bounce on any good news. Lower interest rates should also help, over time. We would be OK owning them, but would keep expectations for gains farily low.