Better Dividend Buy: Telus Stock or Rogers Communications Stock?

Telus Corp. (TSX:T) and Rogers Communications Inc. (TSX:RCI.B) offer comparable value, but one stands well above the other as a dividend buy.

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The S&P/TSX Composite Index was up 35 points in early afternoon trading on May 17. Meanwhile, the S&P/TSX Capped Communication Services Index was down marginally in the same trading session. Today, I want to compare two of the top telecommunications stocks on the TSX: Telus (TSX:T) and Rogers (TSX:RCI.B). Which is the better dividend buy in the final stretch of the spring season? Let’s jump in.

The case for Telus in the middle of May 2023

Telus is a Vancouver-based company that provides a range of telecommunications and information technology products and services to domestic consumers. Shares of this telecom stock have dropped 3.8% month over month at the time of this writing. Meanwhile, this dividend stock is still up 3.5% in 2023.

This company unveiled its first-quarter (Q1) fiscal 2023 earnings on May 4. Total Mobile and Fixed customer growth increased 15,000 year over year to 163,000. That represented the company’s strongest Q1 report of all time. Meanwhile, Telus reported Mobile Phone net additions of 47,000, which was its best Q1 on record since 2010.

Operating revenues increased 15% year over year to $4.92 billion in the first quarter. EBITDA stands for earnings before interest, taxes, depreciation, and amortization and aims to give a clearer picture of a company’s profitability. In Q1 FY2023, Telus posted adjusted EBITDA growth of 10% to $1.77 billion. Moreover, free cash flow jumped 28% year on year to $535 million.

Shares of Telus currently possess a price-to-earnings (P/E) ratio of 26. Meanwhile, this top telecom stock last announced a quarterly dividend of $0.3636. That represents a strong 5.3% yield.

Why you should snatch up Rogers right now

Rogers is based in Toronto and operates as a communications and media company. Its shares have climbed marginally over the past month. The stock is up 2.5% in the year-to-date period.

Investors got to see Rogers’s Q1 fiscal 2023 earnings report on April 26. This was released soon after it completed its massive acquisition of Shaw, which passed through a period of intense regulatory scrutiny. The company reported mobile phone net addition growth of 44% to 95,000. Meanwhile, it reported record capital expenditures of $892 million, as it sought to bolster its network infrastructure and move forward with renovations at the Rogers Centre.

The company posted total revenue growth of 6% to $3.83 billion. Moreover, adjusted EBITDA climbed 7% year over year to $1.65 billion. Adjusted net income increased 20% from Q1 of fiscal 2022 to $553 million while adjusted diluted earnings per share also jumped 20% to $1.09.

Rogers also provided financial guidance for the remainder of 2023. The company now projects total service revenue growth between 26% and 30% for the rest of the fiscal year. Meanwhile, it forecasts adjusted EBITDA growth in the range of 31-35% after its landmark Shaw acquisition.

This top telecom stock currently possesses an attractive P/E ratio of 18. Rogers offers a quarterly dividend of $0.50 per share, which represents a 3% yield.

The verdict

In terms of value, Rogers looks like an enticing pick up at this stage. The stock is especially exciting considering the earnings bump it is due to receive in the wake of the Shaw acquisition. However, as a dividend buy Telus is still the telecom to beat between the two giants.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends Rogers Communications and TELUS. The Motley Fool has a disclosure policy.

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