Whether you are fresh out of school or recently retired, dividend-growth stocks should be a part of your portfolio.
Here are the reasons why I think Telus Corporation (TSX:T)(NYSE:TU) and Potash Corp./Saskatchewan Inc. (TSX:POT)(NYSE:POT) deserve a closer look.
Telus Corporation
Telus is doing a lot of things right and customers have been rewarding it handsomely for the effort.
As Canada’s fastest-growing telecommunications company, Telus has made a commitment to provide the best service in the industry. The strategy is paying off because Telus has the lowest mobile churn rate and the highest blended average monthly revenue per user (ARPU) in the business.
The company is also growing its wireline business as customers migrate to its Telus TV and broadband Internet offerings.
The newest area of the business might be the most exciting for investors.
Telus Health is the country’s largest provider of healthcare communication services. Doctors, hospitals, insurance companies, and patients are using Telus’ products to securely and efficiently record and share critical medical data. As traditional telecom services become more competitive, Telus Health offers a long-term revenue growth opportunity.
Telus has a great track record of dividend growth and share buybacks. Since 2004, the company has increased the distribution 15 times and returned a total of $11 billion to its shareholders through dividends and share buybacks.
Telus currently pays $1.60 per share that yields 3.7%. The company has committed to dividend growth of at least 10% through 2016.
Potash Corp.
Most estimates peg the world’s current population at about seven billion. That number is expected to grow steadily until at least 2050. By that time, there could be as many as 11 billion mouths to feed!
At the same time, farmland is rapidly falling victim to urban sprawl. It doesn’t take a genius to figure out the dilemma, so how are we going to produce more food from less resources? One way to do that is to use a lot of fertilizer.
Global potash demand hit a record 61 billion tonnes in 2014. Potash Corp. understands the trend and has spent billions on expansion projects over the past few years. These facilities are almost complete, meaning that investors should see a huge surge in cash flow in the near term due to the reduction in capital outlays and the increase in revenues. At the same time, wholesale potash prices are moving higher.
Potash pays a dividend of US$1.52 per share that yields 4.7%. The payout has increased significantly in recent years and that trend should continue.
