3 Reasons Why Telus Corporation Is the Big 3 Telecom You Should Own

Telus Corporation (TSX:T)(NYSE:TU) has some very attractive characteristics. If you’re looking for a great dividend stock, look no further than this company.

| More on:
The Motley Fool

If you’re looking for solid, reliable dividend stocks in Canada, the big three telecommunications providers are a great place to start.

Firstly, these companies face relatively little competition and enjoy high barriers to entry. Secondly, they make revenue based on subscriptions, which helps keep earnings nice and consistent. Finally, none of these companies have international ambitions, and they are happy to pay out the bulk of their earnings to shareholders instead. What more could a dividend investor want?

That being said, there are important differences between the big three. One company in particular stands out as a great investment opportunity: Telus Corporation (TSX: T)(NYSE: TU). Below are the top three reasons why Telus is the one you should choose for your dividend portfolio.

1. A best-in-class operator

To state the obvious, this is not an industry where customers are overjoyed with their experiences. However,  among the big three operators, Telus is the one that treats its customers the best.

In 2013, Telus was voted as Canada’s top full-service provider in J.D. Power and Associates’ Wireless Total Ownership Experience study. The number of complaints reported for Telus declined by 27% last year, compared to an increase of 26% for the industry.

These results translate into solid financial numbers. The company added 378,000 wireless subscribers last year — in comparison, BCE Inc. (TSX: BCE)(NYSE: BCE) added only about 100,000 subscribers. Telus also did a better job of holding on to its existing subscribers, with an industry-leading 1.03% churn rate and an industry-leading $4,350 in lifetime revenue per customer.

2. Growth opportunities

Telus’s best-in-class performance means that the company has numerous avenues for growth. One comes from wireless, where data needs among Canadians are always increasing. Just last year, the proportion of the company’s wireless subscribers using a smartphone increased by 11 percentage points to 77%. The acquisition of Public Mobile also adds over 200,000 subscribers and provides some valuable spectrum.

Telus also has opportunities to grow from providing other services, such as television and wireline-based internet services. To illustrate, over the past year the number of TV subscribers grew by over 20%. In contrast, about a third of BCE’s subscribers are wireline phone subscribers, a business that declined by 6.6% last year.

As a result, Telus increased its total subscriber count by 1.4% last year, not including the Public Mobile acquisition. In contrast, BCE’s subscriber count declined by 0.8%.

3. A dividend champion

Last but not least, Telus has done a fantastic job providing value to shareholders, and this shows up in its dividend. Over the past decade, its dividend has been hiked every single year, increasing by over 400% over this time. Better yet, the dividend yields nearly 4%, not bad for a company with such a bright future.

Again, to pick on BCE, its dividend has only doubled over the past 10 years. So even though BCE yields about 5%, Telus still has the more attractive payout.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair has no position in any stocks mentioned.

More on Investing

Double exposure of a businessman and stairs - Business Success Concept
Investing

Better Buy: RBC Stock or the Entire TSX?

Royal Bank of Canada (TSX:RY) is a robust stock, but the index fund could be better long term.

Read more »

Family relationship with bond and care
Investing

Retirees: 2 Top TSX Dividend Stocks to Buy for TFSA Passive Income

Top TSX dividend stocks now trade at discounted prices for TFSA investors seeking passive income.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Metals and Mining Stocks

Beat the TSX With This Unstoppable Dividend Stock

This dividend stock continues to outpace the TSX and then some, providing you with a dividend that you'll want to…

Read more »

Energy Stocks

Here’s My Top Stock to Buy Now, and it’s Not Even a Question

Tourmaline is a quality energy stock trading on the TSX. Here's why I remain bullish on TOU stock right now.

Read more »

Dice engraved with the words buy and sell
Tech Stocks

Selling Losers Before 2023? Buy These 2 TSX Stocks With the Proceeds 

There is one month to 2023. Now is the time to sell your loss-making stocks, take the tax advantage, and…

Read more »

A meter measures energy use.
Dividend Stocks

TFSA Investors: 3 Safe Utility Stocks to Buy and Hold for Decades

Here are three top utilities to spend some fresh TFSA cash on in the new year.

Read more »

money cash dividends
Dividend Stocks

TFSA Investors: An Easy Way to Boost Your Payouts to $350 Per Month

Because of the tax-free nature of the TFSA, investors have several advantages, especially when buying high-quality dividend stocks.

Read more »

Piggy bank next to a financial report
Investing

How to Turn $10,000 Into $200,000 for Retirement

Buy top dividend stocks and use the distributions to acquire new shares.

Read more »