Additional new users and an HR software acquisition led to a 12.4% jump in revenue for Telus during the most-recent quarter.
What’s more, this firm is a leading competitor in its market; look for that to cut your ongoing risk.
Meanwhile the stock trades at 24.5 times the company’s 2023 earnings forecast.
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TELUS (Toronto symbol T; www.telus.com) is Canada’s second-largest wireless carrier (after BCE) with 12.53 million subscribers. It also sells landline phone, Internet and TV services in B.C., Alberta and eastern Quebec.
In the quarter ended June 30, 2023, Telus added 110,000 new wireless phone subscribers (net of cancellations). That’s up 18.3% from 93,000 a year earlier. The average monthly revenue per user also moved up 1.8%, to $58.80 from $57.74.
The company added 124,000 new users of other wireless devices (tablets, etc.) in the quarter. That’s up 34.8% from 92,000 net additions a year earlier.
Telus also acquired LifeWorks Inc. for $2.9 billion in September 2022. Formerly known as Morneau Shepell, this firm sells software and computer systems that help businesses manage a variety of human resources functions.
As a result of those new users and the LifeWorks acquisition, Telus’s revenue in the quarter rose 12.4%, to $4.95 billion from $4.40 billion a year earlier. However, higher labour and interest costs cut its earnings per-share by 40.6%, to $0.19 from $0.32.
Blue Chip Stocks: Restructuring plan will cut long-term costs for Telus
As well, the company owns 72.2% of Telus International (Cda) Inc. (Toronto symbol TIXT). That firm help businesses manage their call centres, websites and digital apps.
Due to weaker demand for Telus International’s services, it plans to cut 2,000 jobs (about 3% of its total workforce. Parent company Telus will also cut 4,000 jobs (4% of it workforce). Severance and other costs will total $475 million in 2023. However, the plan should lower Telus’s annual expenses by $325 million.
Those savings will support the Telus dividend, which totalled $1.28 billion in the 12 months ended June 30, 2023. In July 2023, it raised your quarterly payment by 3.6%; the new annual rate of $1.4544 yields a high 6.1%. Telus has also pledged to raise the annual rate by between 7% and 10% from 2023 through the end of 2025.
Telus will probably earn $0.95 a share this year, and the stock trades at a reasonable 24.5 times that estimate.
Including this latest increase, the company’s dividend has grown at an average annual rate of 6.7% over the past five years. Telus holds a Highest TSI Dividend Sustainability Rating.
Telus is your #1 Income Buy for 2023.
Recommendation in The Successful Investor: Telus Corp. is a buy.