Telus Corporation (TSX:T)(NYSE:TU) and Potash Corp/Saskatchewan Inc. (TSX:POT)(NYSE:POT) are two names that have benefited from the outflow of cash from the energy sector, but that trend is changing.

In fact, both stocks have been under pressure recently for a variety of reasons and dividend investors with a long-term horizon are wondering which company is the better choice.

Let’s take a look at both Telus and Potash Corp. to see if one deserves to be in your portfolio.


Canada’s fastest growing telecom company has been a big winner for investors in the past five years. In fact, the stock is up more than 120% in that time frame, but the stock is down more than 5% in the last two months.

What’s going on?

Part of the blame can be put on the rotation back into energy stocks, but the market is also concerned about some sector-specific issues. This summer, all three-year wireless contracts will disappear and providers like Telus are scrambling to lock-in customers under new agreements before they get the chance to shop around. In order to do so, the companies are offering heavy incentives and this is expected to hit short-term margins.

Recent changes announced by the CRTC also have some investors worried about future earnings growth from TV subscribers.

Next year Canadians will have the option of buying a basic TV package for $25 per month and then pay for the additional channels they want to receive on a one-by-one basis. Subscribers love the idea, but service providers and content owners are not happy.

Telus is in a unique position because it doesn’t own media assets; the company simply distributes the content to its customers. As a result, pick-and-pay should have less of an impact on Telus’ earnings than it could for the actual content owners.

As a long-term bet, Telus is a solid dividend pick. The company has limited competition and is seeing strong subscriber growth in its wireless, Internet, and TV offerings.

At this point the 3.8% yield is safe and investors should see the payout continue to increase at a healthy clip.

Potash Corp.

Potash is under pressure because it just reported weaker-than-expected Q1 2015 earnings and lowered its full-year guidance.

North American farmers are facing the consequences of last year’s strong crop yields. Big harvests mean lower prices and the U.S. Department of Agriculture says farm profits in 2015 are going to drop compared with last year.

Global potash prices are also recovering at a slower pace than expected because big suppliers are in a nasty battle for market share.

All of these issues should be short term in nature and long-term investors should consider the big picture. Potash sales hit a record 61 million tonnes in 2014. This isn’t surprising given the fact that the world’s population continues to increase, while urban development gobbles up farmland.

At the same time, people around the world want more meat and farmers are allocating more land each year to grow crops to feed the extra animals. In the end, this all points to greater demand for crop nutrients like potash.

Potash Corp. is completing a massive capital program. This is good news for dividend investors because more cash flow should be available for distributions once the facilities switch from the development phase to production.

Potash pays a dividend of US$1.52 per share that yields about 4.7%.

Which should you buy?

If you have the cash available, both stocks are solid long-term buys. Potash is going to be more volatile in the near term as the market adjusts to the lowered earnings guidance. If you have to pick one, Telus is probably a safer bet right now.

Don't miss our #1 dividend-growth stock for 2015!

Telus and Potash are strong dividend picks, but our analysts have recently discovered one TOP dividend-growth stock that is even better.

Today, you can download the name, ticker symbol, and price guidance absolutely FREE.

That's right, simply click here now to receive your Special FREE Report, "1 Top Dividend-Growth Stock for 2015--and Beyond."


Let’s not beat around the bush – energy companies performed miserably in 2015. Yet, even though the carnage was widespread, not all energy-related businesses were equally affected.

We've identified an energy company we think offers one of the best growth opportunities around. While this company is largely tied to the production of natural gas, it doesn't actually produce the gas. Instead, it provides the equipment required to get natural gas from the ground to the end user. With diversified operations around the globe, we think it's a rare find in the industry.

We like it so much, we’ve named it as 1 Top Stock for 2016 and Beyond. To find out why, simply enter your email address below to claim your FREE copy of this brand new report, "1 Top Stock for 2016 and Beyond"!

Fool contributor Andrew Walker owns shares of Potash Corp.