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 showing strength 5G technology as 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 saw strong growth during last year’s pandemic. Management claims the number of users almost quintupled during 2020. As virtual health apps 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 stock is fairly valued by industry average multiples of 2.5 times and 7.8 times respectively.
Likewise, Telus is a king of dividend growth, having increased its dividend offering 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 reliable passive income stocks on the market.
At the end of the line
Canadian telecommunications giants have stable cash flow and attractive margins. Telus pushes the boundaries by deploying its cash flow in three exciting growth opportunities. Its recent investments have put it ahead of the 5G and telehealth revolutions. The company is also in the process of mastering the rapidly expanding fiber optic infrastructure in Canada.
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.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool service or advisor. We are Motley! 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’re posting sometimes articles that may not meet recommendations, rankings or other content. .
Silly contributor Vishesh Raisinghani has no position in any of the listed securities. The Motley Fool recommends TELUS CORPORATION.