Starting in 2011, Telus began rewarding its shareholders with twice yearly dividend increases. Under the current version of the plan, the company committed to increasing the annual rate by between 7% and 10% from 2023 through the end of 2025.
More dividend increases beyond 2025 seem likely now that the company has largely completed a multi-year plan to expand its 5G cellular and fibre-optic networks. These upgrades have helped it attract new customers and to sell more services to existing users. What’s more, strategic diversification into high-growth sectors like telehealth and agriculture technology, coupled with strong operational execution, makes this a compelling investment opportunity at current levels.
Meanwhile, the stock trades at 18.7 times the company’s forward earnings forecast.
TELUS (Toronto symbol T; www.telus.com) has 13.61 million wireless subscribers across Canada. It also sells landline phone, Internet, TV, and security services in B.C., Alberta, and eastern Quebec.
In addition, the company owns 85.4% of Telus International (Cda) Inc. (Toronto symbol TIXT), which operates call centres on behalf of over 650 corporate clients in 32 countries. It also helps them manage their computer systems and mobile apps.
Telus’s other businesses include Telus Health, which helps clinics, pharmacies and hospitals manage electronic patient records; and Telus Agriculture and Consumer Goods, which makes software to help farmers and food producers increase crop yields and manage supply chains.
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Telus’s revenues jumped 37.1%, from $14.59 billion in 2019 to $20.0 billion in 2023. Revenues were higher over the five years due to subscriber growth and acquisitions.
For example, in September 2022, Telus acquired LifeWorks for $2.3 billion. Now part of its Telus Health business, that firm sells software and computer systems to help businesses manage various human resources functions.
Blue Chip Stocks: Telus’s earnings grew 10.7% with more growth on the way
In the three months ended September 30, 2024, Telus’s revenue increased 1.8%, to $5.10 billion from $5.01 billion a year earlier. Excluding one-time items, its earnings improved by 10.7%, to $413 million from $373 million; per-share earnings rose 12.0%, to $0.28 from $0.25.
The company expected to have spent $2.6 billion on capital upgrades in 2024 building out its high-speed 5G and fibre-optic networks. As of September 30, 2024, its 5G network was available to 87% of Canadians, up from 85% a year earlier.
Telus expects its revenue in 2024 to rise about 1%. That’s down from its previous estimate for a 3% rise. However, the company’s projected earnings will probably rise 5.0% from $1.01 a share in 2024 to $1.06 in 2025. The stock trades at a reasonable 18.7 times the 2025 estimate.
With the January 2025 payment, Telus will increase your quarterly dividend by 3.4%, to $0.4023 a share from $0.3891. The new annual rate of $1.609 a share yields a high 8.1%. Moreover, the company has pledged to raise the annual dividend rate by between 7% and 10% from 2023 through the end of 2025.
Recommendation in The Successful Investor: Telus Corp. is a buy.
