The Telecom Turnaround
In mid June, there were fears of U.S. telecom giant Verizon (VZ) moving into the Canadian market. On Tuesday June 25th and Wednesday June 26th, panic selling kicked in on all three Canadian telecoms. Over the two-day sell-off, Telus was down over -10.6% closing below $30 per share, and Rogers Communications was down -12%. Bell (BCE) fared much better, only off about -4.0% for the two days. I felt this sell-off was completely overblown. I also felt this was a great opportunity to initiate a position in Telus Corp. (T).
I already had a position in Rogers Communications. So back on Wednesday June 26th I purchased 65 shares of Telus Corp. at $30.50 per share. Telus was a company I had wanted to add to my portfolio for some time, so when everyone else was lining up at the door to sell, I was more than happy to buy. I covered The Canadian Telecoms back in September 2011 for DSO. I found Telus to have the best fundamentals of the three Canadian telecoms. It was also one of my 2012 Canadian Stock Picks.
Even if Verizon did enter the Canadian market they would either have to invest in massive infrastructure costs, or buy out one of the smaller players such as Wind Mobile and Mobilicity. In light of the Canadian Government’s record on foreign takeovers, although they said otherwise, this was likely to be difficult for Verizon. There were also other factors.
This strategy proved to be the right move, when Verizon announced last week they would not be interested in entering the Canadian market. Be greedy when others are fearful.
Thinking about REITs
Dividend Mantra discussed his recent buy of more shares in Realty Income Corp. this week. I’ve been thinking about REITs (Real Estate Investment Trusts) for a while now, especially with their price declines over the last few months. However, REITs may be currently discounted for a reason. Keep in mind any rise in interest rates, whenever that may be, will impact the operational costs and bottom line for REITs. That’s one of the risks moving forward.
I have never been a fan of REITs. Back in the late 80′s to mid 90’s, I worked as a junior draughtsman in the construction industry. I saw first-hand the meltdown in the commercial real-estate sector as the 90′s recession began. This hit both large retail malls as well as many office buildings, and caused a plummet in real estate investments. As a result, I did not invest in REITs when I started my dividend journey back in 2009.
However, I do want to top-up my TFSA and contribute to my RRSP in January. REITs interest me at these price levels. So I may consider entering a position into RioCan Real Estate Investment (REI.UN), with the understanding there is risk involved, and potential for more price declines. I’m also considering going the ETF route, with iShares Capped REIT Index Fund (XRE). RioCan comprises about 19% of XRE, so I’d probably prefer to buy RioCan directly.
The Weekly Lineup
Here are some great articles I’ve been reading this week:
In my last post Hello AWeber, Bye Bye FeedBurner, I discussed my migration away from FeedBurner. Here is an interesting post written back in March on the same topic. Another blogger gives his synopsis in, Let’s Say FeedBurner Shuts Down.
On the dividend front, Dan Mac continues his monthly summaries with Notable Dividend Increases: August 2013.
Over at A Wealth of Common Sense, Ben wrote an interesting post on three Warren Buffett quotes, from an indexing point of view, in Advice from Warren Buffett Circa 1975. You can’t go wrong when you mention the oracle.
Rob L. had an interesting guest post over on My Own Advisor, titled So, when are stocks on sale?
I thought this was an interesting way to look at stocks being discounted, with three strategies given.
What are your thoughts? Do you like Telus and the telecoms? Are you interested in REITs?
Have a nice weekend everyone!
Disclaimer: I am long on Telus (T), Rogers Communications (RCI.B), and interested in RioCan (REI.UN).