Telus (TSX: T): The Perfect Dividend Growth Stock
Telus (TSX: T) (NYSE: TU) is, unsurprisingly, one of the most resilient dividend paying stocks on the market today. After recouping all the losses accumulated in 2020, the stock held its value throughout 2021. It still offers a dividend yield of 4.66% and attractive growth prospects.
Here’s a look at why Telus could be the ultimate dividend growth stock for years to come.
This impressive performance is attributable to the fact that the company is a leading player in the provision of fiber optic broadband across Canada. The company is also deploying its forces on 5G technology because it seeks to become a leader in digital infrastructure in the future.
Deploying fiber optic is proving to be a booming business for Telus and is expected to be another key driver of revenue growth. The average revenue per user on the the optical fiber network is 50% higher. In addition, operating expenses for supporting fiber optic are 20% lower. Fiber optic offerings combined with 5G offerings are expected to propel Telus’ growth.
Telus also has exposure to the telehealth industry. The company’s telehealth and medical software business boomed during the pandemic last year. Management claims the number of users almost quintupled during the year 2020. As virtual healthcare applications attract more users and the medical records platform gains more customers, this segment of Telus’ operations could be another key growth driver.
Analysts are extremely bullish on Telus’ outlook, with RBC’s projected capital income of $ 3.95 billion and adjusted EBITDA of $ 1.486 billion. A proposed $ 1.5 billion capital spending program is also expected to allow Telus to profit from the 5G rollout.
For investors looking for growth, Telus would be an ideal choice. Its exposure to the three ongoing technological revolutions – 5G, telehealth and fiber optics – makes it an ideal growth game.
The stock is trading at 2.3 times sales and 3.5 times book value. The security is valued at fair value based on industry average multiples of 2.5 times and 7.8 times respectively.
Likewise, Telus is a king of dividend growth, having increased its dividend supply from 8.6% in the last quarter to 4.8%. The company’s dividend grew at a compound annual growth rate of 9%, affirming its ability to generate passive income.
Telus has a higher dividend yield and better dividend growth than most other large cap Canadian stocks. Its position in the telecommunications oligopoly makes it one of the most trusted passive income stocks on the market.
At the end of the line
The Canadian telecommunications giants have stable cash flow and attractive margins. Telus is pushing the boundaries by deploying its liquidity in three exciting growth opportunities. Its recent investments have put it ahead of the 5G and telehealth revolutions. The company is also ensuring it has a tight grip on Canada’s rapidly expanding fiber-optic infrastructure.
These initiatives should help the company maintain its steady pace of dividend expansion. It’s a safe bet for investors looking for long-term dividend growth.
Looking for more quality inventory? Here is a list.
The 10 best stocks to buy this month
Renowned Canadian investor Iain Butler just named 10 stocks Canadians can buy TODAY. So, if you are tired of reading about other people getting richer on the stock market, today might be a good day for you.
Because Motley Fool Canada offers a 65% discount off the list price of its best stock picking service, as well as a full membership fee refund guarantee on what you pay for the service. Just click here to find out how you can take advantage of it.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content.
Silly contributor Vishesh Raisinghani has no position in any of the stocks mentioned. The Motley Fool recommends TELUS CORPORATION.