Reading Between the Lines

Reading Between the LInes

Communication has always been a fascinating subject to me. While discussing communication, we always tend to focus on languages, dialects etc, but there is so much more than just the spoken word. This may include other forms of communication such as body language, for instance. This post is a discussion focusing on what is *not* being said and trying to decipher the meaning of something; whether the other person has something to obfuscate or simply not a good communicator. As it turns out, what is *not* being said can shed more light on the interaction. I discuss a few personal stories in this post about reading between the lines.

The following tweet from Michael Batnick a few days ago quoting Peter Drucker resonated with me and reminded that as I get more experienced in a certain aspect of life, it becomes more and more important to learn how to read between the lines. What is it that a person is implying by saying something, or more importantly, what is that crucial piece of information that is not being communicated? As it turns out, this can have a big impact on the overall interaction.

Our Recent Car Buying Experience

To illustrate this idea, let me recount a car buying experience we recently went through. My wife’s car broke down earlier this year. We could have spent a lot of money to keep it going, but considering that it was already 15 years old and would cost us more to fix it to keep running, we decided not to sink more money into it. We tried living on one car, but after a trial of a few months, which didn’t work out — we finally decided that we are a two-car family and the mobility provided was worth the saved time and annoyances of taking public transit (we have a terrible public transit system here in our city, which is a disgrace considering its the capital city).

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Dividend Comparison – Telecom

Telecom companies have become an essential utility over the past few years. Just like essential services such as water and electricity, communication has become the next most important utility for every person. A lot of investors get bogged down with the gadget markers since there is a new shiny toy to talk about every few weeks or months. The arguments between which device is the coolest goes back and forth between Google, Apple and Samsung. The actual winners that provide us with the link to the Internet, the telecom giants, are the real winners no matter which gadget an end-user loves and adores. These telecom providers can be great investments for everyone and in this article, we will compare the dividends of the companies. These companies are cash cows and most of them are mature companies paying out hefty dividends.

US Market

I have filtered telecom service providers in the US which payout dividends on a regular basis (this leaves out some players such as T-Mobil, Sprint etc) and larger than $2B market cap.

Company Name Ticker Quote P/E Yield Payout Ratio 5-yr DGR
CenturyLink Inc CTL $36.27 25.78 5.96% 156.9% 23.03%
Frontier Comm Corp FTR $4.10 26.19 9.76% 250% -16.74%
AT&T Inc T $35.88 28.01 5.02% 138% 2.85%
Verizon Comm Inc VZ $50.28 126.51 4.1% 511.3% 3.67%
Windstream Corp WIN $8.07 30.10 12.39% 270.3% 0%

Canadian Market

With the news of Verizon (VZ) potentially entering the Canadian market, most of the wireless providers had their stock values drop last month. Some of these may have been oversold and potentially at an attractive price to pick up.

Company Name Ticker Quote P/E Yield Payout Ratio 5-yr DGR
BCE Inc BCE $43.82 13.63 5.32% 72% 16%
Rogers Comm Inc RCI.B $42.06 12.49 4.14% 51% 17.22%
Telus Corp T $31.82 15.67 4.27% 67% 8.3%
Shaw Comm Inc SRJ.B $25.50 15.21 4.00% 64% 7.45%

My Thoughts

The US telecom giants have a comical payout ratios and very high P/E ratios. The dividend payouts are simply not sustainable and almost beg for the stock to be shorted. I have decided to stay away from these stocks.

The Canadian providers seem more stable and have a decent payout. The selloff has definitely made them attractive, but if Verizon does enter the market, it means a drop in the market share for each of these. Shaw Communications has been the most resilient of the lot since it is not just a wireless provider and has its business diversified into cable, satellite and programming content. I will be keeping a close eye on the Canadian providers over the next few days and potentially make a move to pick some up.

Disclosure: None

Disclaimer: The information provided here is for educational purposes only. All opinions here are my personal opinions and should not be taken as financial advice. I am not qualified to be a financial advisor. Always consult with your financial advisor before investing in any of the companies mentioned on this blog.