Telus Corporation (TSX:T) Has Got to Be in Your Self-Directed RRIF

Most people who invest in Telus Corporation (TSX:T)(NYSE:TU) probably do it through an RRSP or TFSA. However, your best move is putting it in your RRIF. Here’s why.

| More on:

Since the market lows in March 2009, Telus (TSX:T)(NYSE:TU) has had just two corrections of 15% or more — one in June 2013 and the other in January 2016 — making it exactly the kind of stock you want to own in a registered retirement income fund, or RRIF for short.   

The pure-play telecom company based in B.C. has a retail shop in the Halifax Shopping Centre just around the corner from where I live. If I wasn’t already signed up with Eastlink and only with them for less than a year since moving to the East Coast, I’d have a look.

I can think of three reasons why people 71 or older should own Telus stock in their self-directed RRIF.

Reason #1

As I said in November, Telus is one of the few pure-play telecom companies in North America — nay, the entire world. Whether we’re talking AT&T or Verizon in the U.S. or Rogers Communications or BCE in Canada, they each have media divisions that either is already or could become one.

Verizon’s purchase of Yahoo and AOL to build a content empire has been nothing short of a disaster. AT&T certainly acquired much better assets when it bought Time Warner, but it paid a hefty price leveraging its business to the hilt in hopes customers will devour content available 24/7 on any device, anywhere and, most importantly, will pay for it.

Up here in Canada, Rogers is having a whale of a time trying to unload its media business. Currently, its best bet is for Rogers Media employees to buy the company’s five print publications and two digital brands.   

As for BCE, it’s recently launched a revamped Crave to fight Netflix here in Canada. While I like HBO, which is part of the Crave package, I don’t see a conservative company like BCE spending big dollars on content as Netflix has.

And Telus? It just sticks to the basics: wireless, broadband internet and TV, and traditional landlines. That’s it. That’s all. And most of which is only available in Alberta and B.C.

Not to worry.

What it does and where it does it, Telus does it well.

Reason #2

Unlike its two biggest competitors, Telus is growing the number of wireless customers it has in a big way. In the third quarter ended September 30, Telus added 145,000 wireless customers, 36,000 high-speed internet customers, and 18,000 TV subscribers.

Rogers added 124,000 in the third quarter, while BCE added 178,000. Rogers had 10.8 million wireless customers at the end of the third quarter, BCE had 9.5 million, and Telus had 8.8 million.

So, in the third quarter, BCE increased wireless subscribers by 1.9%, Telus by 1.6%, and Rogers by 1.2%.

Not bad for a company viewed as a weaker, regional choice. It might not be the biggest, but it punches above its weight.

Reason #3

The tricky part about RRIFs is that you have to take out a minimum amount each year, which means you can’t just have income-generating investments in your self-directed plan in case you live to 100.

You’ve also got to have some capital appreciation.

That said, you’ve got to love Telus’s 4.8% dividend yield. Come hell or high water, CEO Darren Entwistle is going to boost that baby one or two times a year.

“[Telus] has increased their dividend by roughly 7% or 8% each year with a decent yield on it of 4% or so,” Douglas Kee, chief investment officer of Leon Frazer & Associates, said recently. “At the beginning of the year, the utilities got creamed because interest rates were going up. The telecoms got hurt but not as badly. More recently, the telecom companies have held in pretty well and the utilities have come back.”

As my Fool colleague Nelson Smith observed recently, Telus has raised its dividend 16 times since 2011, more than doubling its payout in less than a decade.

It’s not the dividend yield that counts, but rather the extent to which a company increases its dividend each year.

Telus isn’t shy about rewarding shareholders.

The bottom line on Telus stock

When you’re investing in an RRIF, you don’t want to take a lot of risks. By investing in Telus, you get a manageable amount of risk while lining your pockets.

Of the Big Three, Telus is my favourite by a long shot.

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.

David Gardner owns shares of Netflix. Tom Gardner owns shares of Netflix. The Motley Fool owns shares of Netflix. Fool contributor Will Ashworth has no position in any stocks mentioned. Verizon is a recommendation of Stock Advisor Canada.

More on Investing

stock analysis

Buy the Dip: 2 Stocks to Buy Today and Hold for the Next 5 Years

These Canadian stocks are trading at discounted valuations, providing an opportunity for buying the dip.

Read more »

bulb idea thinking

Safety in Size? 2 of the Bluest Blue-Chip Stocks I’d Buy Now

TC Energy (TSX:TRP) and another cash cow have huge dividend yields for safe investors.

Read more »

A cannabis plant grows.
Cannabis Stocks

Can Aurora Cannabis Stock Recover in 2024?

Aurora Cannabis stock is down 99% from all-time highs but remains a high-risk bet, despite its cheap valuation.

Read more »

Question marks in a pile
Dividend Stocks

Where Will Brookfield Infrastructure Partners Stock Be in 5 Years?

Brookfield Infrastructure Partners (TSX:BIP.UN) kicked off 2024 with a bang. Where will it be in five years?

Read more »

TFSA and coins

TFSA Investors: 3 Incredible Stocks for 2024

Are you looking for stocks to buy and hold for years for your TFSA? These three stocks could deliver exceptional…

Read more »

A person looks at data on a screen
Stocks for Beginners

3 Warren Buffett Stocks to Hold Forever

Warren Buffett sold some shares in Apple (NASDAQ:AAPL), and the market had questions.

Read more »

Dividend Stocks

Golden Years Gain: Your CPP Benefits at Age 70

CPP users delaying pension payments until 70 will receive substantial monthly income streams in the golden years.

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

3 Dividend Stocks You Can Safely Hold for Decades

Top TSX dividend stocks are on sale.

Read more »