“The Next Verizon: 9% Dividend!”

By Travis Johnson, Stock Gumshoe, December 14, 2007

This one opens up with some tantalizing language, of course:


It’s from Mark Skousen, from his High Income Alert newsletter — and of course, if you’d please subscribe, he’ll tell you the name of this secret telecom stock that’s paying massive dividends and taking over the world!

Or, being a good and cautious investor, you could just continue reading … let your friendly Gumshoe tell you what the company is, then make a decision once your itchy trigger finger stocks shaking and the blood stops rushing to your forehead. We’ve seen a few Skousen high income teasers before, including Southern (Peru) Copper, which it seems he got on and off of several times, and I don’t know that acting urgently upon reading any of them would have made much of a difference over the long run.

But this company is nothing like Southern Copper — it’s in a whole different industry, one I don’t write about much.

It is a telecom company, and therefore it’s no coincidence that the teaser is coming to us live this week — everyone’s talking about telecom in the wake of AT&T’s great dividend raise and positive comments, and noticing that generally these companies are outperforming the market of late, and pretty significantly. Telecom success stories are everywhere — everyone is flabbergasted by China Mobile, and by mobile telecom growth in developing countries everywhere, of course, but they’re also even taking some interest in Qwest for the first time in ages, after that debt-ridden old punching bag finally announced their first dividend in six years.

I’ve even been taking a gander at a telecom stock lately, though it’s neither this particular one nor in this part of the world.

And as with all good teaser ads, he’s got a “hook” — a catalyst for the stock that will make you want to jump right up and take action so you don’t miss the fun.

In his words, “A recently instituted government policy has created an intense rivalry that promises to open the flood gates of profits… for the last man standing… And I am predicting that the “last man standing” will be this blockbuster newcomer that is making a huge buzz on the global scene.”

This stock went public on the NYSE in February of this year (good clue, that!)

And it has “aggressive” expansion plans, double digit profit margins, and high growth to go along with the big dividends that we already mentioned.

And, as you’ll note from the headline of this article, he calls it “The Next Verizon.”

“This foreign-based telecommunications company is competing in the fight of their life… a fight to be the biggest and best provider for telecommunications services in their home country of Israel.”

They offer pretty much all the standard telecom services that make investors’ mouths water lately — internet service, music downloads, expensive roaming for visitors (this is Israel, which gets a lot of visitors no matter what).

And final clues:

“During an earnings release this month, they reported that earnings doubled to $203 million!”

They recently raised their dividend by 33%, and it’s one of the highest in the market — something like 9%.

So … an Israeli telecom, embroiled in a heated fight for market share, paying a high dividend, and started trading in the US in February?

My friends, the Thinkolator may be in the shop, but that’s still enough for the Gumshoe to tell you that this has to be …

Cellcom Israel (CEL)

The Israeli mobile phone market is indeed crazy competitive, and there is a new government policy that is making for more competition: number portability. That’s the same thing we got here in the US a few years back, the right to keep your cell phone number when you move to a different service provider. The theory is that this allows all the companies to compete more viciously to poach each other’s customers. And in this particular company’s case, the fact that they’ve been a little bit behind in rolling out new services apparently means that they’re more nicely positioned to compete now, when it really matters (they didn’t have to convince the early adopters to try 3G services on their phones since competitors softened up the marketplace first, but they offer them now).

And this company really does pay a hefty dividend, though it’s not quite 9% any more since the shares have been going up pretty nicely the last week or few. The shares are just over $30 for a yield of a bit over 8% … still certainly among the highest dividends for regular stocks on the market.

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