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The Best Canadian Dividend Stocks to Buy: REITS Canada and other Top Canadian Dividend Stocks.

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Topic: Dividend Stocks

TELUS CORP. $40

TELUS CORP. $40 (Toronto symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 599.9 million; Market cap: $24.0 billion; Price-to-sales ratio: 1.9; Dividend yield: 4.4%; TSINetwork Rating: Above Average; www.telus.com) is Canada’s second-largest wireless telephone service provider, after Rogers Communications, with 8.5 million subscribers. Wireless now supplies 56% of Telus’s revenue and 66% of its earnings.

The remaining 44% of revenue and 34% of earnings come from its wireline division, which serves 1.5 million residential phone customers in B.C., Alberta and eastern Quebec. This business also has 1.6 million high-speed Internet users and 1.0 million TV clients.

The stock is down 11% from its July 2015 peak of $45. That’s partly due to Shaw Communications’ (Toronto symbol SJR.B) recent deal to pay $1.6 billion for wireless carrier Wind Mobile, which operates in Ontario, Alberta and B.C.

The deal allows Shaw to offer wireless service to its customers, in addition to its main cable TV, satellite and Internet offerings.

Telus already sells similar bundles in Western Canada, so Shaw’s move will increase competition for new customers.

However, Wind uses older cellular technology, so Shaw may have to upgrade its networks if it expects to lure customers away from Telus and other big carriers.

Moreover, Telus’s strong focus on customer service should help it hang on to subscribers: in the third quarter of 2015, its churn rate (which shows how many subscribers cancelled their service) improved to 1.28% from 1.32% a year earlier.

We prefer Telus to Manitoba Telecom for new buying. That’s because it trades at a moderate 15.1 times its projected 2016 earnings of $2.65 a share. The company also recently raised its dividend by 4.8%; the new annual rate of $1.76 yields 4.4%.

Telus is a buy.

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