It was more than a month ago now that Canadian telecom giant Telus (TSX:T)(NYSE:TU) announced it was slashing its dividend. It was news that many investors had already been anticipating, as the stock's yield looked unsustainable at more than 10%.
On July 31, when it reported its second-quarter earnings it also cut its dividend drastically, by 55%. However, even with the reduced quarterly payout of $0.1875, that still translates into a fairly high yield of 5.6%. Due to the stock's significant decline over the years, its yield has risen substantially, and thus, even though Telus cut its dividend heavily, the payout may remain attractive to dividend-focused investors.
The good news for investors is that at a reduced rate, the payout is much safer than it was before. And the stock itself has been steady since the dividend cut, as it has been flat over the past month. Over the past five years, however, the stock has crashed by 54%, with seemingly no end in sight to its free fall.
For long-term investors, Telus may be an intriguing option to consider these days, given that it's still a top telecom company, and its dividend may now be safer moving forward. In the near term, there's still some risk with Telus but as a long-term investment, the business doesn't appear to be in any danger.
The stock may not have bottomed out just yet, but at its current price point, it may prove to be a good buy, for both the long-term upside it possesses, plus its relatively high yield.
