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.
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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.
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.
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.
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.
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Fool contributor Karen Thomas has no position in any of the stocks mentioned.