Telus (TSX:T) Stock: 3 Reasons to Buy Now

Telus’s stock price has soared in recent years, as it has outperformed on May metrics, but there are still plenty of good reasons to buy now.

| More on:
calculate and analyze stock

Image source: Getty Images

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

Telus (TSX:T)(NYSE:TU) is a force to be reckoned with. After all, it is one of Canada’s leading telecommunications companies. No matter what you’re looking for as an investor, Telus probably has it. From dividend growth to innovation to stability, Telus stock keeps on giving.

Here are the three main reasons to buy Telus stock today.

Telus stock = dividend growth

This $34 billion telecom giant is also a dividend-growth king. In its latest quarter, Telus increased its dividend by another 8.6%. It translates to a healthy dividend-growth rate that has been sustained for many years. In fact, its dividend has grown at a compound annual growth rate of almost 9% in the last 10 years.

What can investors take away from this? Well, the obvious thing is that Telus is a stock that will deliver growing dividend income for years to come. But also, Telus’s dividend growth and reliability is a reflection of its underlying business. It’s a strong free cash flow-generating business that has proven to be quite reliable and resilient. Take a look at Telus stock’s price graph to see its exceptional five-year performance.

Telus stock price graph

Telus accelerates its broadband expansion

Fibre networks are all the rage these days. The performance of these networks is second to none. And the payoff is becoming increasingly obvious. Fibre optics networks bring numerous advantages versus the traditional copper networks. For example, with fibre optic networks, average revenue per user (ARPU) is 50% higher. Also, operating expenses to support fibre are 20% lower. The benefits are clear.

And not only do the benefits accrue to Telus; they also accrue to the user in the form of a more complete and fulfilling offering. This can be seen in the fact that the number of products per household that has fibre networks is 25% greater. Also, the loyalty of fibre customers is stronger. This is evidenced by the ultra-low churn rate of fibre customers.

So, given all of this, it’s easy to understand why Telus is accelerating its investment in its broadband expansion. It will bring all of these aforementioned benefits. Finally, the fibre offering combined with Telus’s 5G offering will propel growth in Telus Health. It will, in fact, propel growth in all the digital verticals that Telus is pursuing. And it’ll drive Telus’s stock price higher.

Telus stock: High-growth, technology-oriented verticals will boost growth

Technology solutions is Telus’s area of growth. It’s Telus’s growth engine that is sparking innovation. Digitally led customer experiences saw a healthy double-digit revenue growth last quarter. This includes Telus Health and Telus International. The health vertical is the most advanced vertical today. It’s a preview of what Telus can achieve through these technology verticals.

Here are some statistics that might get you excited about the future of Telus technology solutions. Virtual care visits, facilitated by Telus, nearly tripled. Telus Health Services revenue increased 10%. Looking ahead, Telus Health will focus on three high-growth areas. The first is primary care services. This includes 16 healthcare centres across Canada with virtual care services and connected care such as home health monitoring. The second is healthcare provider solutions. This is the physician and pharmacy solution that shares patient information with clinicians that are using Telus records. Finally, Telus’s health insurance benefits management (HBM) solution covers a total of 17.5 million under its solution. Easy claims management and more have allowed HBM to thrive. This is a mature business that has achieved strong margins.

Overall, Telus’s technology verticals have room for significant growth. In the future, more verticals, like Telus Agriculture, will drive additional growth. Telus Agriculture is a connected tech solution that will improve connectivity and efficiency of food systems. From Telus’s website: “Telus Agriculture optimizes the food value chain by leveraging data in new ways to increase efficiency, productivity, and yields.” Telus is aiming to bring technology and all of its benefits into different industries. In my view, this will ensure that Telus’s stock price continues to outperform.

Motley Fool: The bottom line

Telus stock suits many investors. Strong dividend growth and innovation-fueled growth make Telus stock a top stock today.

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. The Motley Fool recommends TELUS CORPORATION.

More on Dividend Stocks

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Parents: Here’s Every Credit and Benefit You Can Claim From the CRA

Parents have it hard already, so make sure the CRA is doing everything for you by dishing out payments you're…

Read more »

edit Colleagues chat over ketchup chips
Dividend Stocks

3 Canadian Dividend Stocks to Buy and Hold for Life

These dividend-paying stocks have solid earnings base to support their payouts for decades.

Read more »

A golden egg in a nest
Dividend Stocks

Create a Million-Dollar TFSA With Just $1,000

If you have a TFSA, you can easily make a million-dollar portfolio by investing on a consistent basis in this…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

3 Canadian Stocks With Over 6% of Dividend Yield

Boost your passive income with three safe dividend stocks.

Read more »

TFSA and coins
Dividend Stocks

TFSA Pension: 2 TSX Dividend Stocks to Buy Now and Hold for Decades

These top TSX stocks pay great dividends and look cheap to buy right now for a TFSA retirement fund.

Read more »

Dividend Stocks

TFSA Dividend Income: 2 TSX Stocks to Buy on the Pullback

These TSX stocks look oversold and pay attractive dividends that continue to grow.

Read more »

oil tank at night
Dividend Stocks

1 Top TSX Energy Stocks for Summer 2022

TSX energy stocks have tanked recently, but they could enjoy a nice summer rally. Here's one top stock I'm eyeing…

Read more »

Dividend Stocks

Market Correction: 2 Cheap TSX Dividend Stocks to Buy Now for a Self-Directed RRSP

These top TSX dividend stocks look cheap right now for a self-directed RRSP focused on total returns.

Read more »