The rollout of 5G technology is set to revolutionize the global telecom sector. Indeed, this secular growth catalyst is one I’ve had my eye on for some time. In this space, I’ve had my eye on Telus (TSX:T)(NYSE:TU) stock for some time. Indeed, I view Telus as a leading Canadian communications provider with some serious upside.
Yes, downside risks exist. Higher inflation and the potential for interest rate hikes may take some of the lustre off of this stock. However, there’s a lot to like about the direction Telus stock is headed right now.
Let’s dive into why Telus stock may be a no-brainer addition to a well-constructed portfolio in Q4.
Strong fundamentals provide catalyst for Telus stock
This past earnings cycle has been an interesting one to watch. Some companies outperformed expectations wildly, while others saw the impact of supply chain disruptions and slower-than-expected demand.
In Telus’s case, this past quarter was downright impressive.
The company added 320,000 new customers in the third quarter. This has been the highest quarterly additions on record, propelling the company’s top and bottom lines higher.
Additionally, the company’s churn rate dropped significantly. Total churn across the company’s television, internet, and mobile connectivity segments came in below 1%. Those are some very, very good numbers.
On the bottom line, Telus reported profit of $358 million. This was lower than expected. However, the company did decide to raise its dividend this past quarter. Currently, Telus provides investors with a healthy dividend yield of 4.5% at the time of writing.
I think this dividend hike in the wake of what has been an otherwise “okay” quarter is a great sign for long-term income investors.
Partnership with General Motors to boost Telus
Another big piece of news that’s boosted Telus stock in the wake of so-so earnings is a partnership deal with General Motors. This deal allows Telus to provide 5G connectivity to vehicles to enhance in-car services. These services include music downloads, satellite navigation, and other key services.
Telus’s ability to secure additional agreements on the back of this announcement remains to be seen. However, this is undoubtedly a strong catalyst for Telus stock for investors looking for a medium- to long-term growth catalyst.
This is also the first time General Motors has chosen a Canada-based communications provider. According to the executive VP of Telus Business Solutions, this partnership will lay a strong foundation for developing automotive capabilities. I tend to agree.
Bottom line
Telus is indeed a significant player in the Canadian telecom space with double-digit YOY growth, high profits, and great dividend payout. Investors looking to add a long-term holding in Q4 ought to consider Telus stock right now.
