Spring Sale
Telus (TSX:T) stock is a fantastic dividend play going into this new year. Undoubtedly, shares of the $30.3 billion telecom firm are coming off a bit of an “off year.” And though it’s been a solid January, I’m not so sure the name will be too kind to weak-stomached conservative investors who aren’t prepared for what could be another wild year of fluctuations. Indeed, the Canadian telecoms used to be a “steady” passive-income staple.
Nowadays, the high yields are only for those willing to stay aboard the roller-coaster ride, which has seen steep double-digit percentage drops. Indeed, if you can’t stand such drops, there’s no shame in taking a raincheck on the telecom plays. While Telus is probably one of the best Big Three telecom plays at the time of writing, with its 8% dividend yield and recent dividend increase, I simply do not see enough catalysts ahead that make me want to rush into the stock. Indeed, shares still don’t look all too cheap to get in here, given the potential risks and uncertainties surrounding its comeback plan.
At 19.76 times forward price to earnings (P/E), shares don’t necessarily scream deep value. Of course, I could be wrong if management can turn the tide this year and gain considerable share over its top rivals in the wireless scene. In any case, I’d much rather get my high yield elsewhere in 2025 and beyond. Here are two “smart” passive-income options for investors looking beyond the ultra-high-yielding telecom firms as they attempt to climb out of their industry rut.
Quebecor
Sure, Quebecor (TSX:QBR.B) is another telecom — one that has been under a lot of pressure in recent years. That said, I think the name is cheaper and has a potentially more attractive long-term growth runway. The stock has done pretty much nothing in the past two years, with around 8.5% downside over the past five years.
Indeed, it’s been a rough stock to hang onto, but, at the very least, it’s somewhat close (around 14%) from all-time highs. And with 9.8 times trailing P/E and 9.2 times forward P/E, I view shares as deeply discounted. Of course, you’ll have to settle for the relatively small 4.3% dividend yield with the name. It’s a sustainable payout but almost half of what you’d get with Telus!
Is foregoing all that yield worthwhile? If you’re a bull on Quebecor’s move to become that fourth major national telecom player, I think shares are a solid bet for the long haul. Just a few weeks ago, the stock got a notable upgrade over its “risk-reward set-up.” I couldn’t agree more. Shares are too cheap, given the progress and the road ahead.
SmartCentres REIT
SmartCentres REIT (TSX:SRU.UN) is another smart way to get yield for cheap. Shares sport a 7.64% yield at the time of writing, which is incredibly generous for a retail real estate investment trust (REIT) with such a high occupancy rate. Of course, retail REITs aren’t all too attractive, but if you recognize the staying power of physical retail and the need for strip malls, I find SRU.UN to be a severely undervalued bargain that’s hiding in plain sight.
Though I don’t know when shares will turn a corner (they’re in a nasty bear market right now), I’d be more than willing to buy more shares on further weakness (shares go for $24 and change per share today). If you’re looking for income alternatives, the retail REIT scene is a great place to look, in my view.
