The top Canadian dividend stocks are solid investments to generate steady passive income for decades. Thankfully, several Canadian stocks with fundamentally strong businesses have rewarded their shareholders with consistent dividend payouts, making them reliable bets.
Among the high-quality investments, I’ll focus on one magnificent dividend stock, which is down about 13% year to date. While it has underperformed the benchmark index, its fundamentals remain solid. It continues to enhance its shareholder value through higher distributions and offers a high yield. Further, it will likely increase its dividend at a healthy pace.
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The magnificent Canadian dividend stock
Among the dependable options, Canadian communication giant Telus (TSX:T) is a compelling stock to buy and hold forever. Its impressive dividend payment and growth history, sustainable payouts, and attractive yield make it a top stock for passive-income investors.
Telus recently announced a 7% increase in its dividend. This marks the 27th hike since the launch of its multi-year dividend-growth program in 2011. Moreover, Telus has a stellar track record of returning value to shareholders, with over $26 billion distributed since 2004, including more than $21 billion in dividends.
Currently, Telus stock offers a quarterly dividend of $0.402, reflecting a high and sustainable yield of 8.2%.
Why invest in Telus stock?
Telus stock has lagged the broader market due to heightened competitive activity and macro headwinds. Despite these headwinds, the company has demonstrated resilience by consistently expanding its earnings and growing its subscriber base. Telus has maintained an impressively low churn rate, reflecting its ability to retain customers in a competitive market. These strengths enable the company to generate higher cash flows and enhance shareholder value.
The company’s ongoing investments in spectrum acquisitions and capital expenditures for network upgrades have significantly improved its capacity, reliability, and coverage. These advancements allow Telus to attract new customers and connected device subscribers, driving revenue growth.
Telus’s mobile network revenue remains strong. This trend could be sustained, driven by its growing mobile phone subscriber base and the higher adoption of its Internet of Things (IoT) solutions.
As the telecommunications industry transitions to 5G, mobile data consumption is surging, a trend expected to persist in the coming years. Telus has positioned itself to capitalize on this growth by investing in technologies like wireless small cells integrated with its TELUS PureFibre network. These upgrades enhance the coverage and capacity of its 5G network, ensuring Telus remains at the forefront to benefit from this trend.
Beyond traditional telecommunications, Telus has diversified its offerings to include a portfolio of integrated digital customer experience solutions. These services span digital IT solutions, such as cloud computing and artificial intelligence (AI)-driven automation as well as trust and safety services, AI data solutions, and front-end digital design consulting. This comprehensive approach positions it well to capitalize on opportunities stemming from ongoing digital transformation.
Additionally, Telus will likely benefit from the rapid growth of its connected device subscriber base, bolstered by its expanding IoT product portfolio.
In summary, Telus is a reliable dividend stock offering a compelling yield. Its strong subscriber base, investments in technology and network infrastructure, and focus on delivering profitable growth position it well to pay and increase its dividend in the coming years.
