Telus Corp. (TSX:T)(NYSE:T), is Canada’s second largest telecommunications provider that provides wireline, data and wireless service, and provides investors with stability, predictability and dividend income.
Aren’t you looking for more stability and predictability in your retirement plan? I know I am.
Telus, which has recently reported better-than-expected results, is currently trading at a dividend yield of 4.5%, and is an excellent addition to investor portfolios.
It has been one of the faster growing telecom companies, and although this growth is off of a smaller base, this faster growth has made Telus stock a success story.
Here are three key reasons to own Telus stock.
Strong results
Telus’ fourth-quarter results came in above expectations, with adjusted EPS of $0.69 (versus consensus expectations of $0.68), a 6.3% increase in revenue, and a 4.1% increase in adjusted EBITDA.
Furthermore, the company guided investors to a 2019 revenue growth rate of 2% to 4%, which is more than expected, and the company had more than 112,000 net additions to wireless subscribers. Adjusted EBITDA growth in expected to be between 4% and 6%, also better than expected.
The 2018 free cash flow was $1.2 billion, with free cash flow of between $1.1 billion to $1.2 billion expected in 2019, and as capital expenditures ease off in 2020 and beyond, this number will be fast approaching $1.8 billion.
Leverage has declined to a debt-to-capitalization ratio of 58%, and as free cash flow rises, this will decline even further.
Reliable, growing dividend
Telus has a long history of semi-annual dividend increases, with a 7-year compound annual growth rate (CAGR) of 11.4%.
Going forward, Telus is expecting to deliver a 7% to 10% annual growth rate in its dividend.
Opportunities abound
Telus is involved in different projects that will help in the long-term growth trajectory and competitive advantage of the company.
The Telus Health Electronic Medical Record (EMR) solution has invested $2 billion in the Canadian healthcare system in the last five years, and has a dedicated team to manage all tech and data needs.
Also, Telus International and the fact that Telus has industry-leading 5G coverage of 70% all contribute to a strong future.
Telus Health and Telus International are expected to make a positive contribution in 2019.
Final thoughts
In summary, Telus is a stable, defensive stock that is well-suited for investors looking for dividend income and long term growth in a stable setting.
With the economy appearing to weaken, this seems to be a good entry point for investors to increase their weighting of defensive stocks in their portfolios.
