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Discussion Starter #1
I have been looking at this company for a while now due to nice dividend yield and the fact it has raised the dividends for for over 25 years, with the purchase of T-Mobile there may be significant buying opportunities (maybe not ;-) in the near future, however to be honest I am not sure I want to touch it at all.

Even before the purchase, the dividend growth has been slow (about 5% over 5 years), payout ratios over 70% (although it dipped to 50% in 2010), earnings growth spotty with good years between no or very little growth, they already have over 100 billion in loans, now they get another loan for 20B and issue 15B in common shares for the purchase, will most likely have crap load of one time charges, and if the deal falls through will have to pay 3B in compensation fees. Not to mention industry with huge capital expenditures and pricing pressures.

Thankfully I am not a shareholder, but do I want to be one if there is a significant buying opportunity in the near future, can they maintain (increasing) dividends, am I the only one seeing dark clouds ahead for AT&T shareholders?
 

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Discussion Starter #2
... and big T is up 5% or so in premarket, ohh how wrong was my initial assessment.... at least short term ;-)
 

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I think of AT&T as the Microsoft of the telecoms -- a big lumbering Brontosaurus that will probably be brought eventually down by the dozens of nimble velociraptors tearing away at its hide.

They got a big boost with the iPhone, but customers are defecting to Verizon in droves, in many cases even before their contracts are up, because the AT&T experience is so lousy -- dropped calls, labyrinthine bureaucracy, 30-page phone bills, etc.
 

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I have owned ATT for several years...

Im not sure how this T-Mobile takeover will work out...but Im not selling it.

I might also say that I also own Verizon...and I also own Vodaphone.

So perhaps you should buy more than one telco....the divs are good....and I think they are stable over the long run...maybe not 3 baggers, but good cash flow.

I am also looking at Telefonica for their cental and south America exposure.

A friend suggested I look at Telstra too..( Australian), and I have been looking at NZT..( New Zealand),,for quite a while.

You might tell from all these that I am a div guy.

good luck
 

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Discussion Starter #5
You might tell from all these that I am a div guy.
So am I (for the most part ;-).

Obviously the street likes the merger (although not as much as it did 4 hours ago ;-), hopefully the benefits will outweigh the costs, which on the surface appear to be huge (share dilution, $20B loan, transaction costs, various one time charges). Last two dividend increases were 1.8% and 2.5% respectively, and I believe the expectation is that next increase will be only a penny (which is pretty much just to keep the streak going).

With $14B in additional common shares the earnings will be diluted by around 8%, I gather there is an expectation of tangible growth from the transaction, otherwise the stock wouldn't be up. I for one do not see this stock as a great dividend growth in the near future, and imo growth is actually more important than current yield.

Hope you do well on this stock Warp ;-)
 

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so sorry i don't have this link but recently was reading an article (globe ? natpost ?) about how the big telco shares are slowing down, in fact may be somewhat at risk esp if global correction gets underway.

article proposed a telco etf as a substitute & named most of them. Most liquid one is ishares IYZ. This was my pick couple years ago, because it also has fairly liquid options market. Article mentioned a new etf for mobile devices only, symbol something like FONE.

sorry to be vague so far. But article also alluded to recent insider selling in bce so i checked this out. Indeed bce ceo george cope did exercise options & sell about 1.2 million shares on or about 1 mar/11. That was not an impulse trade heh.

there has been light insider buying (few thousand shares) in bce since early march.

in telus, there has been light insider selling recently but nothing on scale of cope.
 

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At&t

Wondering what the consensus is on this one.

Pros
Pe under 10
Div over 5.5%

Con's
Net profit margin is below industry standard
Low current
Fairly high debt

PE suggests value but they seem to be fueling growth via borrowing. Anyone else have any insights?
 

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I agree the entry point is definitely good. I am more split on where to put this money US telcos, lifecos or banks, Canadian lumber or Europe.
 

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I see. Bullish on U.S. telcos, I don't see hundreds of millions of Americans giving up their iPhone contracts anytime soon. Also like VZ for the same reason. Not too savvy on U.S. lifecos, although AFL:US has had a good run since 2012 and P/E now signals buy.

Own Wells Fargo.

Canadian lumber, not sure.

Europe, same. What in Europe are you looking at? VEA?
 

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It is incredibly low indeed. I don't have time to dig into their financials. Presumably it has to do with the sector rotation out of defensive stocks. I hold the big four telco's in Canada - I should probably see this as a warning signal to lighten up my holdings there. I wonder though with all of these type of stocks....for every 1% increase in the Fed rate, what kind of impact does that cause on EPS? The rotation out of these names and into growth seems out of proportion to me
 

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On second look is it that low? $3.05 eps for FY2017 so 10.8 PE ratio and I would expect 10-12 for a telco. When I googled, it showed p/e ratio in the 6's but that is clearly not correct.

FWIW ValueLine projects $55-$60 share price in 2022 based on expected earnings.
 
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