Telus (TSX:T) is a wireless and wireline telecommunication service provider many in Western Canada may be familiar with. The company’s focus on the Western Canadian market means this is a stock that simply doesn’t have the coverage other national players have. But for many long-term investors, that can be a good thing.
Over the past five years, Telus has performed decently, with some capital appreciation seen over time. However, this stock is widely viewed as more of a dividend stock worth holding for the long term, given the company’s current yield of 6.9%.
Let’s dive into why Telus may be a top option to consider relative to other dividend-paying companies on the TSX right now.
A business model worth considering
Telus’s impressive dividend yield is supported by rather robust and strong cash flow growth seen over the long term. Providing an extensive range of communication products and services, including data services, voices, IP, mobile, television and other related services, Telus has cemented its status as one of the big three wireless service providers in Canada. With more than nine million mobile phone subscribers nationwide, this company should continue to benefit from an oligopoly structure in this sector.
Pricing power is everything these days, and Telus certainly appears to hold all the cards in this regard, particularly in its key markets. Competition does exist for consumers, but in Western Canada, Telus continues to dominate. Those betting on a continuation of long-term trends that have been in place for a very long time may want to consider this company’s current yield right now, particularly with Canadian bond yields dropping.
Recent financials
In the second financial quarter of 2024, Telus reported operating revenues of $4.9 billion, driven by an increase in its customer headcount. Telus’s operating revenue and other income for the period came in at $4.9 billion. In addition, Telus reported total operating expenses of $4.2 billion and net income of $221 million for the quarter.
The company’s strong bottom-line performance highlights its dominance in its core markets and allows the company to continue to provide attractive dividend income for investors. Those seeking a telecom giant with strong dividend-growth potential may want to take a look at Telus stock right now.
Is Telus stock worth investing in?
As a top tech company in Canada with global operations, Telus is likely to continue to be one of the more stable performers on the TSX in the long term. I’m not sure this company will be one of the best-performing stocks on the Toronto Stock Exchange over the next year or two. But from a dividend perspective, there’s a lot to like about a bond proxy that provides nearly double the rate long-term bonds do right now.
Accordingly, for those nearing or entering retirement, Telus is among my top picks in this current macro environment.
