Telus stock provides a solid 5.2% yield
Here’s a top pick for new buying in 2023, and this one is a leader in its market, which helps cut your risk if the economy weakens. New investments in its business should also provide many more years of rising profits beyond 2023.
That’s because in the past few years, this firm has invested large sums on upgrades to its wireless and high-speed Internet networks. These big projects are now coming to an end, which will free up more cash for dividends.
What’s more, the shares trade at 19.3 times forecast earnings. All this added together makes this firm our #1 Income Buy for 2023.
TELUS CORP. (Toronto symbol T; www.telus.com) is Canada’s second-largest wireless carrier, with 12.0 million users. That places it just behind BCE’s Bell Mobility. Telus also sells landline phone, Internet, TV and home security services in B.C., Alberta and eastern Quebec.
The telecom is nearly finished a multi-year plan to upgrade its wireless networks to handle 5G signals, which are much faster than current 4G (LTE) systems. It has also upgraded most of its copper-line networks to fibre-optic cable.
The lower capital spending going forward will free up more cash for dividends. In fact, Telus just increased your quarterly dividend by 3.7% with the January 2023 payment, to $0.3511 a share from $0.3386. The new annual rate of $1.404 yields a high 5.2%.
Based on that rate, dividend payments would total $1.36 billion in 2023, or 45% of Telus’s projected free cash flow. That’s below its target range of 60% to 75%, so investors can look forward to more dividend hikes.
Moreover, the company has pledged to raise the annual dividend rate by between 7% and 10% from 2023 through to the end of 2025.
Investors can expect Telus to earn $1.36 a share this year; the stock trades at a reasonable 19.3 times that forecast.
Recommendation in The Successful Investor: Telus Corp. is a buy.