3 Top Reasons That Make This Dividend Stock a Buy Right Now

These three reasons make Telus Corporation (TSX:T)(NYSE:TU) a top dividend stock to buy and earn growing income.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When you’re buying a stock to earn regular income, there are certain qualities you should look for before making an investment decision. Among Canada’s Big Three telecom companies, Telus (TSX:T)(NYSE:TU) fulfills many criteria to make it a top dividend stock to buy. 

Telecom stocks are great cash cows

Telecom utilities have a unique appeal if your aim is to earn regular income and don’t take too much risk. These companies, after building a huge network that connects people through the internet and cellphones, generate strong cash flows. And that cash flows keeping coming as long as customers continue to pay their bills.

Telus is Canada’s fastest-growing telecom services provider, with $13.3 billion of annual revenue and 13.1 million subscriber connections, including 8.9 million wireless subscribers and 1.7 million high-speed internet subscribers. The company has also created a niche in providing IT solutions to the healthcare industry with a strong global business process unit.

Strong growth momentum

This solid position in Canada’s telecom sector, where the major competition is only among three companies, is helping Telus to post growth in both revenue and profit.

In an earnings announcement on Feb. 14, Telus added 112,000 new wireless contract subscribers in the fourth quarter, ahead of average forecasts for about 105,000.

On the residential side of its business, Telus added more subscribers than expected, with 24,000 new television customers and 28,000 new internet clients.

Profit at the company increased by 4% to $368 million, or $0.60 a share. On an adjusted basis, Telus earned $0.69 a share, ahead of analyst estimates. Revenue increased by 6.3% to $3.76 billion as the company booked gains from data services on both wireless and home internet.

A reliable income player

With this growth, investors are also benefiting in the shape of growing dividends. Telus is targeting ongoing semi-annual dividend increases, with the annual payout growth in the range of 7-10% through to the end of 2019.

With an annual dividend yield of 4.48%, investors are getting $0.545 a share quarterly payout. I see Telus’s dividend growth continuing in an environment which is lucrative for utilities.  

Canadian telecom stocks operate in a sweet spot where the competition is not that intense, as you’ll witness south of the border. The company is gradually expanding its customer base with strong earnings growth and cash distribution.

Bottom line

Telus shares, at $48.59, have seen a good rally this year and are trading close to the 52-week high. Telus is among the top dividend payers in Canada, and any dip in its stock should be a buying opportunity to take advantage of its growing dividend.

Should you invest $1,000 in Telus right now?

Before you buy stock in Telus, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Telus wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Haris Anwar has no positions in the stocks mentioned in this article.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

protect, safe, trust
Dividend Stocks

Where I’d Allocate $20,000 in 2 Safer High-Yield Dividend Stocks for Retirement Needs

Here are two safer, high-yield dividend stocks I'm looking at for my retirement needs.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

3 Reasons I’m Considering Enbridge Stock for a $5,000 Investment This April

I'm considering Enbridge stock to provide some defensive appeal and a juicy dividend to my long-term portfolio.

Read more »

monthly desk calendar
Dividend Stocks

A 9.2% Dividend Stock Paying Cash Every Single Month

With one of the highest dividends out there, this dividend stock deserves attention in your portfolio.

Read more »

Happy golf player walks the course
Dividend Stocks

Build a Powerful Passive Income Portfolio With Just $20,000

If you are worried that the bear market could reduce your savings, these stocks can build a powerful passive income…

Read more »

Hand Protecting Senior Couple
Dividend Stocks

How I’d Use My $7,000 TFSA Contribution to Start Retirement Planning

These TSX stocks have solid fundamentals and are well-positioned to deliver significant tax-free total returns over time.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

How to Turn Your TFSA Into a Gold Mine Starting With Only $10,000

It doesn't have to be complicated or scary. You can turn any portfolio into a major gold mine.

Read more »

ways to boost income
Dividend Stocks

Passive Income: How to Invest Your TFSA Limit in 2025

This TFSA strategy can reduce risk and boost yield.

Read more »

coins jump into piggy bank
Dividend Stocks

Here’s the Average Canadian TFSA and RRSP at Age 25

Are you not meeting the average? Then check out this ETF that can bridge the gap.

Read more »