Telus Corporation (TSX:T)(NYSE:TU) is Canada’s third-largest telecom, with wireless operations across the country, and wireline services primarily in Western Canada.
The telecom sector offers a few nice advantages. It’s a subscription business with steady revenue. Most folks will cut a lot of things before they cut internet or their mobile phone. And the company doesn’t really have to worry about some upstart competitor moving into the wireless business.
Each area of its business is delivering steady growth. Wireless subscribers grew slightly in the company’s most recent quarter, as well as churn staying under 1%. Subscriber growth in high-speed internet and television services was offset by declines in landlines.
This growth plus price increases to subscribers saw revenue increase 2.6%.
Profit continues to be solid. Over the last year, the company reported $2.24 per share in net earnings, putting shares at 19.6 times earnings. Analysts project earnings will grow to $2.66 per share this year, which values shares at 16.5 times forward earnings, a reasonable valuation.
Telus has been a dividend growth machine since 2010. Back then, shares paid out $0.20 per quarter. After a raise every six months almost like clockwork, investors are now getting paid $0.46 per share each quarter. That’s good enough for a 4.2% yield.
Telus has a payout ratio of approximately 70% of 2016’s expected earnings, meaning the dividend is pretty safe. In fact, investors can likely count on dividend raises annually for the
foreseeable future.
