Telus’s (TSX:T)(NYSE:TU) stock price had less downside in the first three months of 2020, just as it had less upside in April. The stock rose a mere 2.2% in April compared to a 10.5% rise for the TSX. In the first quarter of the year, Telus’s stock price fell 9.5%, versus a 13.4% fall for the TSX Index.
So, the stock was less volatile with less downside. This really illustrates the value of a stock like Telus. The fact that it has less volatility makes it an anchor for our portfolios. This is an invaluable trait as we tackle today’s uncertain and precarious environment.
Please read on for a look at what drove Telus stock price performance in April and in 2020 so far. We will also look at what we can expect from Telus stock going forward.
Telus’s stock price benefits from stability as we can expect robust upcoming earnings
Earnings season is here. It is an earnings season that will see many blow ups, many disappointments, and an abundance of bad news. At a time when the majority of companies will report weak and even catastrophic earnings, a company like Telus is a comfort. Earnings at Telus will be relatively unaffected by the economic troubles.
Telus’s revenue is sticky. The telecommunications industry is a defensive one. And Telus stock is a star among stars, with strong free cash flow and dividend growth. Telus will report first-quarter results on May 7. Estimates are calling for earnings of $0.36 per share, down slightly relative to last year’s result.
Telus results will be a bright spot in a sea of trouble. Investors can expect to see a solid, resilient business model in action. For the year, free cash flow is expected to rise at least 50% to between $1.4 billion and $1.7 billion. Telus has a long history of semi-annual dividend increases, with a seven-year compound annual growth rate (CAGR) of almost 12%.
Today, with isolation and social-distancing policies in effect, telecommunication companies are seemingly more important than ever. All of this should drive demand for Telus stock.
Telus’s stock price benefits from increased visibility and promise of Telus Health
Telus Health is a leader in digital health technology solutions. The COVID-19 struggle has brought this fact to the forefront. “Telus Health is leveraging the power of technology to improve access to care and revolutionize the flow of health information.” The goal is to create better outcomes for Canadians. The more this comes to the forefront, the greater the impact on Telus stock.
Recently, the benefits of this technology have been put on display. In response to the healthcare challenges presented by COVID-19, Telus has expanded its digital home health monitoring solution. This platform “enables healthcare providers to track symptoms and provide medical help for more patients as they recover from home.” This means better care, a lower burden on hospitals, and less virus spread.
Foolish bottom line
We can expect Telus stock price to continue to provide a steady and resilient performance. The company’s stable and growing earnings and cash flow profile underpin this expectation. It is also underpinned by a defensive industry and a generous 5% dividend yield.
Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.
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 Karen Thomas has no position in any of the stocks mentioned.