Is Telus a Buy?

Telus (TSX:T) stock could make for an appealing dividend play if growth to value is the theme of the year.

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Telus (TSX:T) is a fantastic telecom that’s seen its share sail through a rather brutal rough patch over the past year. Indeed, economic and industry headwinds could continue to weigh on the firm’s coming quarters. But that’s no reason to throw in the towel on a well-managed company that I think could come surging once the so-called “soft landing” for the economy happens and it’s time to recover again.

Indeed, economic landings can be tough to project, but the good news is you need not worry about the timing if you’re looking to invest for the long haul. You see, Telus is one of the yield-heavy dividend stocks that can pay you handsomely while you wait for some sort of recovery in the share price. Though it’s always tempting to try and time a bottom in a stock, I think those who wait around for such could risk missing out on getting into a stock altogether.

So, as an investor, you should seek to get shares of a wonderful firm at a good price. Not seeking to get the absolute best price possible, running the risk of walking away empty-handed when Mr. Market serves you a pretty decent deal.

Telus stock: Up from its lows, but can the momentum continue in 2024?

At writing, Telus stock is up around 11% from its October 2023 bottom. Though shares did retreat into the back half of 2023, I still believe you’re getting a great bargain when it comes to the telecom titan. The yield stands at a rich 6.3% at the time of writing.

It’s a safe payout that is unlikely to be trimmed, even if Canada’s economy gets rocked this year. Though the stock could run the risk of falling back to its multi-year lows, income investors should relish such an opportunity. As shares of Telus fall, its yield stands to climb. If it breaks the 7% mark again, I’d be more than willing to add to a position.

As investors shy away from tech stocks and look to dividend plays (like Telus), which may have been passed up in favour of hot innovators, I’d look for Telus to outperform the likes of the Nasdaq 100, an index that’s heavy in tech and tech mega-caps (the Magnificent Seven, as some like to call them). Indeed, Telus stock is a steady Eddie that returns a great deal of capital back to shareholders. But don’t count it out if 2024 sees a pivot toward value and away from the artificial intelligence (AI) innovators that only seemed to climb higher in 2023.

In a way, boring dividends are beautiful, perhaps more beautiful than the most innovative darlings on the front of AI.

The Foolish bottom line on shares of Telus

Telus stock seems like a good value right here, especially if you seek passive income. Shares are still down around 30% from their all-time highs (hit back in 2022), and the yield is still on the generous side at a whopping 6.3%. Sure, you could have bought the stock when the yield was closer to 7%.

However, 6% in a falling-rate world is nothing short of enticing, especially in a market that could start rewarding fundamentally strong dividend payers.

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 Joey Frenette 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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