Is it Too Late to Buy Telus Stock?

Telus Corp. (TSX:T) offers solid value and income, while the broader telecom industry is faced with regulatory change.

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Telus (TSX:T) is a Vancouver-based company that provides a range of telecommunications and information technology products and services in Canada. Today, I want to explore how Telus stock has performed over the past year and in the first half of this decade. Moreover, I want to dig into the state of the telecommunications space in Canada and how Telus looks as a prospect in early 2024. Let’s jump in.

How has Telus stock performed over the past year?

Shares of Telus have climbed 3.6% month over month as of close on Monday, January 15, 2024. However, the telecom stock is still down 12% year over year. Telus stock has managed to produce only a marginal gain since it opened just above the $25 price point in January 2020. The stock closed at $24.63 per share after trading ended on January 15.

On the other hand, shareholders in Telus stock have been able to rely on its dividends. We will dig into its dividend payout and history when we get to its earning coverage later in the piece.

The state of Canadian telecoms in 2024

The Canadian telecom industry passed through a relatively turbulent year in 2023. On the investment side, higher interest rates had a negative impact on telecom stocks like Telus. Higher savings rates meant that investors seeking income had a plethora of solid options over the past year. Fixed-income investment vehicles fell back into favour in this higher-rate environment. Even Guaranteed Investment Certificates (GICs), which had offered paltry rates of return through the 2010s, now offer rates that rival the current dividend yield of Telus and its peers.

Telecoms have also been under fire from regulators. Francois-Phillipe Champagne, the current minister of Innovation, Science and Industry, handed down a mandate in 2023 that required the Canadian Radio-television and Telecommunications Commission (CRTC) to prioritize consumer rights, affordability, competition, and universal access.

With that in mind, the coming year is shaping up to be one of transition for the Canadian telecom industry.

Should investors be encouraged by Telus’s recent earnings?

Telus is expected to release its fourth-quarter (Q4) and full-year fiscal 2023 earnings in the first half of February. Meanwhile, it released its Q3 FY2023 earnings on November 3, 2023. The company reported operating revenues of $4.99 billion — up 7.5% compared to the previous year. Moreover, adjusted net income was reported at $373 million or $0.25 per share — down 20% and 26%, respectively, compared to the third quarter of fiscal 2022.

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. This measure aims to give a clearer picture of a company’s profitability. In Q3 FY 2023, Telus delivered adjusted EBITDA of $1.82 billion. That was up 5.5% in the year-over-year period.

Bottom line

Shares of this top telecom stock currently possess a price-to-earnings ratio of 44. That puts Telus in favourable value territory compared to its industry peers. Moreover, this telecom stock last paid out a quarterly dividend of $0.376 per share. That represents a tasty 6.1% yield. Telus has delivered dividend growth for 20 consecutive years, which makes this stock a Dividend Aristocrat.

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 TELUS. The Motley Fool has a disclosure policy.

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