Can Telus Stock Surge Higher in 2024?

Here’s why Telus (TSX:T) remains a top telecom option for long-term investors seeking growth and yield.

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Telus (TSX:T) is a prominent Canadian telecommunications and information technology player. One of the largest companies, focusing on the Western Canadian market, Telus has long been an attractive option for long-term investors, due to its steady growth and dividend payouts.

After recently publishing its third-quarter (Q3) results, this company has seen some strong interest build in its stock price. To be certain, expectations of lower interest rates certainly help bond proxies like T stock. With that lens in mind, let’s dive into why Telus could surge higher in 2024.

Another dividend hike is coming

For those who believe bond yields are likely to drop in 2024, owning shares in companies like Telus that offer above-average yields (Telus’s dividend yield sits at an impressive 6.3% at the time of writing) is a good idea.

Notably, Telus boasts a strong record of noticeably stable dividend payments. The company’s yearly dividend payments have increased to $1.50 per share in 2023 from $0.64 per share in 2013, implying compounded annual growth just shy of 9%.

Although Telus’s earnings per share have declined somewhat in recent years, I don’t think the company’s financials are likely to deteriorate further. Over 2024, it’s expected that Tesul will bring in bottom-line growth, which should allow the company to improve its payout ratio, which currently sits above 100%.

Record results lead to excitement

Telus published its Q3 FY23 results in November 2023. According to its reports, this company witnessed a total telecom communication customer growth of 406,000 by the end of Q3 from 59,000 last year. With this metric, this company has set an all-time quarterly growth record.

Furthermore, its quarterly dividend payout increased to $0.3716. This is a 7.1% increase from the metric this company recorded during the same period last year. With this, Telus displayed a dividend yield of approximately 6.5% last year. 

Moving on, as per its Q3 data, this company also recorded a 7.2% growth in its consolidated operational revenue and a 5.5% growth in adjusted earnings before interest, taxes, depreciation, and amortization. During its third quarter, it focused on executing its cost-efficiency program as promised in its Q2 results.

Telus will continue to pursue this goal even in Q4 to achieve permanent cost reduction across its organization. This will eventually support Telus’s growth profile and help generate cash flow more efficiently. 

Adding to its spectrum portfolio

Recently, Telus announced the acquisition of 1,430 licences in the 3,800-megahertz (MHz) spectrum auction in Canada for $620 million. With it, Telus hosts roughly 100 MHz of 5G midband spectrum across Canada. This acquisition further enhances Telus’s capacity to deploy 5G technology with its midband spectrum. 

In September, this company also announced the launch of PureFibre X 3.0 Gigabit internet. This will help increase bandwidth and provide excellent internet connectivity in Canada. This investment is a part of this company’s plan to invest $81 billion in Canadian telecom by 2027.

Bottom line

Telus’s recent results, its long-term history of dividend payments, and its status as a leading Canadian telecom player make this stable long-term stock worth holding into 2024. If you believe bond yields will continue to drop, as I do, I think next year could be a solid year for high-yielding stocks like Telus.

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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