Is Telus Stock a Buy?

Here’s why long-term investors may want to consider Telus (TSX:T) as a core holding from both a growth and dividend perspective.

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The Canadian economy is largely dependent on industries such as mining and energy. Thus, it should be no surprise that the Canadian stock market is mostly dominated by these stocks. However, there is another industry that is often overlooked but has a significant impact on the overall market’s performance: the telecom industry. 

The Canadian telecom industry operates as a steadfast oligopoly, with a few dominant companies controlling the market. It bears a resemblance to the structure seen in Canada’s railroad and banking sectors.

While investors may be familiar with names such as Rogers, BCE, and Quebecor, there’s no doubt that  Telus (TSX:T) is among the key players investors ought to focus on.

Here’s why I think Telus stock is a buy and is among the best telecom plays Canada has to offer. This is a company with a strong growth profile and one which provides excellent dividend income (with a current yield of approximately 6.2%.

Let’s dive in!

Telus and its consistent growth record 

Telus stands as a prominent Canadian telecom and technology conglomerate. With operations in mobility, internet, cable, healthcare, home security, and more, the company operates numerous subsidiaries. While providing mobile and internet services nationwide, Telus primarily focuses on markets in British Columbia and Alberta. Remarkably, its 5G and LTE networks cover an impressive 99% of Canada’s entire population.

In 2021, Telus demonstrated its profitability and growth, with annual revenue surpassing $13.4 billion and an operating cash flow exceeding $4.5 billion. The company’s performance has been strong, making it an attractive investment option. Notably, Telus is an affordable stock with a compelling dividend yield of 6.2%, indicating a potential for further expansion.

Should you buy it for its dividend? 

Telus’s success is strongly attributed to its strategic focus on investing in cutting-edge technologies. The company has been at the forefront of embracing innovations like 5G, artificial intelligence, and the Internet of Things. 

These forward-looking investments have not only enhanced service quality and reliability but also created new revenue streams. Early adoption of 5G has positioned Telus as a telecom market leader in Canada, providing faster and more reliable services to its customers. 

Patient investors can take advantage of the current situation, as the stock’s 6% dividend yield offers a promising opportunity for growth once the market, economy, and interest rates recover.

Bottom line 

Even though Telus does not focus strongly on media exposure or marketing as much as its competitors, it certainly focuses on its services, such as wireless networks. Rightly so, their strategy has been working out just fine. Hence, if you are an investor with a long-term investment horizon, Telus will be a great addition to your portfolio. 

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.

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