Telecom sector: offense, defense, AND dividends
The overall S&P/TSX Composite Index has rallied 37% from its March lows, led by sectors such as Financials and Energy. The capital rotation from a more defensive stance to cyclical and high-beta sectors has been prominent in recent weeks. Consequently, one of the laggards throughout this rally has been the telecom sector, as the S&P/TSX Telecom Services Index has increased a mere 10% over that same period. This material underperformance, in our opinion, was unwarranted and has left a gaping investment opportunity that encompasses various attributes including: income through dividends;, attractive valuation relative to historical standards and U.S. peers; and, a rare combination that offers defensive characteristics and exposure to discretionary and business spending (thereby positioning for an eventual economic recovery). Below we highlight 6 reasons for exploring investment opportunities in the telecommunications sector.