25-Sep-2020:  https://www.livewiremarkets.com/wires/buy-hold-sell-6-sustainable-dividend-stocks

In this "Buy Hold Sell" segment from LivewireMarkets.com, Jessica Amir of Bell Direct sits down with Neil Margolis of Merlon Capital and Michael O'Neill from Investors Mutual to discuss six income candidates and whether they can be trusted for sustainable dividends.

They include 1) Fortescue Metals Group - Which is facing questions around how long elevated iron ore prices can last; 2) Telstra - Whose current dividend is under doubt due to earnings and margin pressures; 3) Medibank Private - A business swimming in cash but contending structural issues impacting insurance affordability; and 4) AMP - A company that's been in the news for all the wrong reasons.

Neil and Michael also each bring their one top stock idea for sustainable dividends, trading at an attractive valuation right now (Aurizon & IOOF).  This episode was filmed on Wednesday (23 September 2020).

Here's the transcript of the Telstra section where Neil (Sell TLS) and Michael (Buy TLS) have opposite views:

Telstra (ASX:TLS)

Jessica Amir: Okay. Staying on you, Neil, Telstra. Their shares are not doing so well of late. Buy, hold or sell?

Neil Margolis (Sell): Telstra's a sell still. We wrote an article last September about this on our website. The cash flow of the company is not that strong. By their own measure, the underlying earnings are around 10 cents a share when you exclude the NBN disconnection payments. That still includes a little bit of a contribution from the fixed-line business, which we ultimately think is going to be a break-even proposition that's re-selling the government NBN. It's going to be hard to make money on that. So you're left with a mobile business, which is a good business, but the margins and prices are high. So we think underlying earnings of say 10 cents, maybe a dividend of 7 cents, the market is still pricing it as if the dividend is 10 to 16 cents, so we think it's a sell.

Jessica Amir: Thanks. Neil. Michael, what do you think? Telstra, pretty tightly held. Buy, hold or sell?

Michael O'Neill (Buy): Telstra is a buy for us. It's on a 5.5% yield. It does have 50% market share in fixed-line and mobile, and fair to say they've been through a very tough period of competition from Optus and Vodafone at unsustainably low returns, and something's got to give. And we see their 5G leadership is underpinning some return to improvement in market share and also margin over time.

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[I do not hold TLS shares.  I prefer TPG amongst the larger Telcos, and I also hold MAQ and UWL.]