Investment Article
Canadian Telecom Stocks
Enclosed are three Morningstar reports on Canadian Telecom stocks. I believe that there are investment opportunities in this country and this sector. Please allow me to explain why.
In the past 5 years, the iShares MSCI Canada Index increased 11.55%, while the S&P 500 Index declined by 8.29%. Even more striking, over the past 10 years the Canadian Index has soared 158.47% compared to a modest 16.35% gain in the S&P 500 Index[i]. During the past 5 years, the Canadian dollar has appreciated by 15.01% against the US dollar and the two now are trading close to parity. Clearly, the Canadian markets have outperformed the US markets over this time period.
In many respects, Canadian telecom companies are well equipped to provide services to the increasing number of high-end consumers in Canada. Wireless providers focus on increasing the number of customers buying smartphones because these customers tend to spend more money on data plans. Similarly, cable companies emphasize the growing use of digital cable: customers with digital cable typically spend 50% more per month[ii]. With further consolidation expected in the telecom sector within the next couple of years, the remaining corporations will be more apt to raise prices in order to focus on becoming more profitable rather than obtaining a greater market share.
These three Canadian telecom companies currently all have dividend yields of higher than 3.60% and free cash flow yields of greater than 5%[iii]. This means that these companies are able to continue making investments into their growing broadband networks, while at the same time generating more cash for dividends and share buybacks. With all three having reasonable 3-year dividend ratios, they should be able to maintain their strong dividends even if a global slowdown occurs.
At Armstrong Advisory Group, we manage wealth for affluent and educated families. You will find three Morningstar research reports enclosed with this material, and please understand that we are not recommending all of these stocks today. We would like to extend to you the opportunity to have your current investment portfolio reviewed. During this review process we will help you determine if any of these three Canadian Telecom stocks would be appropriate. Our minimum household account size is $250,000. Please call (800) 393-4001 if you would like to have your current investment portfolio reviewed. For our complete database of articles please go to www.armstrongadvisory.com.
[1] www.finance.yahoo.com. 19 Jan 2012.
[1] www.google.com/finance. 19 Jan 2012.
[1] www.morningstar.com. 19 Jan 2012.
Dividend yield investing may not be suitable for all investors. You should never invest solely on the basis of dividends. Higher dividends will result in lower retained earnings. Investments paying dividends do not carry lower risk. Dividend payments are not guaranteed by the issuing entity. The issuer can discontinue the dividend at any time. Dividend payments reduce the price of the security by the amount of the paid dividend.
Securities offered through Securities America Inc., Member FINRA/SIPC and advisory services offered through Securities America Advisors, Inc. Armstrong Advisory Group and the Securities America companies are unaffiliated. Representatives of Securities America, Inc. do not provide legal or tax advice. Please consult with a local attorney or tax advisor who is familiar with the particular laws of your state. 1/12
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