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10/27/22 Capitalist Times Live Chat
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AvatarRoger Conrad
6:41
Mainly, Energy Transfer is getting healthier and rewarding investors by raising its dividend, with the target of besting the pre-pandemic cut rate of 30.5 cents per share. Earnings are due out November 1, and I expect to see more healthy free cash flow after dividends to cut debt, make target acquisitions and possibly buy back stock. Our highest recommended entry point is 15--as it's been for some time.
Roman S
6:43
What do you think about CEQP CRESTWOOD EQUITY PARTNERS LP, and WES WESTERN MIDSTREAM LP and MMP MAGELLAN MIDSTREAM  LP?  I bought all three of these a few years ago and they went way down and have come all the way back up to break even. Do you see these as sell candidates where I would move the money into something better or do you think they have a bright future ahead of them?
AvatarRoger Conrad
6:43
Hi Roman. We cover all of these in our MLPs and Midstream coverage universe, which you can access on the EIA website under the Portfolio tabs. We also hold Crestwood and Magellan in the model Portfolio and believe both have a lot more upside left as the energy cycle unfolds. You're also not going to find anything yielding nearly as much that's safe and is growing the dividend every year.
Guest
6:46
Hi Roger. What is your opinion on the time to buy individual municipals? Would you wait or is your opinion now is as good a time as any? I know that predicting interest rates is all but impossible. Thank you and Elliott for your efforts.
AvatarRoger Conrad
6:46
I'm generally wary of most bonds now, other than those maturing in one year or less. We do hold a small position in Vanguard Intermediate-Term Tax Free in our CUI Plus portfolio, which is greatly downsized form where it was earlier this year. Expenses are very low and risk is controlled by low duration and high credit quality--and yield has risen to 2.64% tax advantaged. I would say if you are going to buy munis, keep them short term and use a broker so you can buy opportunistically. But generally speaking, I think we're going to see more bond market downside.
Aaron
6:46
Roger, would you please comment on the right time to buy some individual municipal bonds. I appreciate your comments and Elliott's as well.
AvatarRoger Conrad
6:46
Thanks for your question Aaron. Please see the answer I just gave on that question.
Alex M
6:49
Hi Roger.  Has your opinion on TDS changed at all given the evolving economic climate and headwinds facing the other telecoms?  Thank you.
AvatarRoger Conrad
6:49
I'm definitely going to be interested in their Q3 results and updated guidance early next month. But at this point, there's no reason to believe there's been any deterioration in outlook since Q2 numbers and guidance over the summer. I think TDS has a very unique position as owning and operating the best 5G and broadband network in the primarily small town and rural regions where it does business. And their current aggressive CAPEX in broadband is pretty much locking in that advantage--while it's funded with internally generated cash flow. That makes the company a prospective takeover target as well, though we may need to see a shift in anti-trust philosophy on the federal level for any major telecom deals to get done.
Alex M
6:59
Hi Roger.  In recent advertising campaigns, it looks like T-Mobile is trying to brand itself as having a more thorough 5G coverage map than Verizon (i.e., images of a map of the country with more T-mobile "pink" than Verizon "red" indicating superior coverage).  Since Verizon has built its brand on having the most robust and reliable network, I wonder how it plans to refute this claim in this increasingly competitive landscape.  Do you foresee Verizon focusing more on commercial accounts in order to avoid getting in a price war with T-mobile for retail customers?  Just wondering how you see their strategy evolving since T-mobile is directly challenging their long-standing brand position as the "most reliable network".  Thank you.
AvatarRoger Conrad
6:59
No one does telecom advertising better than T-Mobile US. And it's also the clear Wall Street favorite in the sector--because it's promised to use essentially all free cash flow after CAPEX to buy back stock the next few years. That's a strategy to suit its primary owner Deutsche Telekom (48.64% ownership), as it will enable DT to take its share over 50% without having to spend any money.

I thought T-Mobile Q3 earnings were pretty solid, though aside from a better presentation they were pretty much on the same lines as what we saw at VZ and T--the most important point being consumers are generally not willing to pay more for 5G, unless the price is right. And I would argue what exactly 5G is for the consumer is pretty ambiguous. I think eventually 5G will mean something for consumers. But right now, it's just an extra cost at a time of inflation with a recession likely.

In contrast is business/industrial 5G, which we've already seen provide a big boost to China's Big 3 and now NTT. That's because
AvatarRoger Conrad
7:01
the applications can improve efficiency and cut costs at a time of inflation pressure--by increasing possibilities for automation and remote monitoring/operations. Verizon in my view is the best positioned US wireless network to take advantage of the industrial internet demand, which is also getting a lift from reshoring of US manufacturing and logistics. And I think it's proving that by snaring the lion's share of that business.
7:04
I can't say when investors will start paying more attention to that aspect of 5G--it's so much easier for analysts to fall back on the same old metrics to compare the Big 3 US telecoms such as who did best on consumer wireless additions. But it does make me more confident holding VZ at 7.2x next 12 months earnings and a 7% plus yield. As for TMUS, the best way to own it is with Deutsche shares trading at less than 12X earnings and a yield of 3.5%--as at the end of the day TMUS will be run for their benefit, not US investors paying 25.5X next 12 months earnings and receiving no dividend.
Guest
7:11
Roger: when did ET raise its dividend to $1.06 per share?  Today?  Yesterday?  Good news - Yippee!!!
AvatarRoger Conrad
7:11
They raised the quarterly rate to 26.5 cents per share effective with the November 21 payment. That's the fourth consecutive quarterly boost and keeps ET squarely on track to restore the pre-pandemic rate of 30.5 cents per share by mid-2023.
AvatarRoger Conrad
7:12
Well that's it for the questions we have in the queue for this month, as well as  the emails we received previous to the chat. If for any reason you feel like your question wasn't adequately answered, please drop us a line at service@capitalisttimes.com.
7:13
On a final note, Elliott and I will be presenting at the Orlando MoneyShow on October 31 (Happy Halloween everyone) and hope to see many of you there. Have a great evening everyone!
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