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Patrick McKeough is one of Canada’s top safe-money advisors. The Wall Street Journal, Forbes and The Hulbert Financial Digest have all recognized his ability to find stocks with hidden value. He is editor and publisher of The Successful Investor, Stock Pickers Digest, Wall Street Stock Forecaster and Canadian Wealth Advisor; inventor of the Quick Profit/Value System and the ValuVesting System™. A best-selling Canadian author, he wrote Riding the Bull, the book that predicted the 1990s stock-market boom.

Dividend stocks: Smartphone contracts keep cash flowing for Telus

March 13, 2012 -  One Comment
Posted by: Pat McKeough Filed in: Income Investing
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Dividend stocks: Telus smartphone image

TELUS CORP. (Toronto symbols T and T.A; www.telus.com) gets most of its growth from wireless services. Its 7.3 million subscribers across Canada now supply 52% of its earnings.

The remaining 48% of Telus’s earnings comes from its wireline division, which mainly consists of 3.6 million traditional phone customers in B.C., Alberta and eastern Quebec. This division also includes 1.3 million Internet users and 509,000 TV customers.

Telus added 369,000 wireless subscribers (net of deactivations) in 2011. That’s down 17.4% from a net gain of 447,000 users in 2010, mainly due to the loss of a contract with the federal government.

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Even so, Telus continues to benefit as more of its subscribers opt for smartphones. These users now account for 53% of Telus’s wireless subscribers under long-term contracts, up from 33% a year earlier.

Telus also sells most of its smartphones under long-term contracts, which makes it harder for users to switch providers. Customers under long-term contracts now account for 83.5% of its total wireless customers, up from 81.8% a year earlier.

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Dividend stocks: Telus plans to merge two classes of shares into one

Telus’s overall revenue in 2011 rose 6.2%, to $10.4 billion from $9.8 billion in 2010. Wireless revenue rose 9.0%, while wireline revenue rose 3.3%. Earnings rose 15.5%, to $1.2 billion from $1.05 billion. Earnings per share rose 14.4%, to $3.74 from $3.27, on more shares outstanding.

Telus now plans to merge its common and class A non-voting shares into a single class of shares. If shareholders approve, each non-voting share will become one common share.

Telus also recently raised its quarterly dividend by 5.2%, to $0.61 a share from $0.58. The new annual rate of $2.44 yields 4.3% for both classes.

In the latest edition of The Successful Investor, we look at the potential risks and rewards of the company’s decision to increase spending on its wireless and high-speed Internet networks. We also consider the possible consequences of its plan for a single class of shares and the sustainability of its current dividend. We conclude with our clear buy-sell-hold advice on the stock.

You get our recommendation on Telus and many more of the top dividend stocks for Canadian investors when you try a risk-free introductory subscription to The Successful Investor. As a new subscriber, you can save $50.00 — and get all the details on “My #1 Stock Pick for 2012.” Click here to take advantage of this special subscription offer.

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One Response to “Dividend stocks: Smartphone contracts keep cash flowing for Telus”

  1. Phil Tillman on March 13th, 2012 at 4:31 pm

    My wife and all my married daughters use cell phones.
    They bought me one and paid for time. I used it once in three months. They bought it for the old man’s emergency use. I am 78. I can’t stand the attitude (rudeness) of people with these items, and the complaints they make about charges.
    There is a market for people like me that will purchase their own device for true emergency use. And use it on a pay for call basis.
    I am not a dodering old fool, I own a PC (two moitors)
    Mac Book Pro, and iPod. I watch these things interfere with my grandkids getting an education.

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