Q: We own Emera, BCE and Telus in a dividend portfolio and notes these three stocks were down today by around 3 percent. Should we be concerned holding any of these three over the next three years primarily for dividend income? Are their dividends safe and valuations reasonable to hold and/or accumulate?
5i Research Answer:
The telco sector has been hit hard and valuations are approaching historical lows. Sentiment is very negative but this can also create good bounce potential. No dividend is guaranteed but we do not think any of these are at immediate risk of being cut. We think each of these could be slowly accumulated into further declines, with a view on managing exposure. None should be expected to show high growth and are income investments, primarily. But lower interest rates could certainly help the trio, given enough time.