Q: how low do you think the two telcos can keep going. at over a 10 year low now and even the unbelievable dividend [if it is not cut] does not stop bloodbath from going on and on day after day.
5i Research Answer:
Sentiment can be fickle, and selling often begets more selling as investors start to worry. Stocks can often overshoot to the downside. That being said, but T and BCE have 'issues' that need to be dealt with. Investors are worried. Dividend growth is certainly going to slowdown, and a cut is always possible, as no dividend is guaranteed. But we think as Canadian rates decline sentiment could improve. Both companies are taking steps to address their cost structure. Assets could be sold to improve financial flexibility. We can't time the bottom, but we have seen this movie before: when investors en masse hate something, there is often an opportunity created.