Telus (TSX: T) is one of Canada’s big telecom stocks. That means it generates a reliable revenue stream and pays a handsome dividend. But lately, Telus stock has come under scrutiny.
That’s because Telus suspended its semi-annual dividend hikes, prompting investors to look elsewhere for growth rather than investing in Telus stock. Telus remains a reliable telecom, but dividend freezes raise questions about its growth trajectory.
One alternative for investors to consider is Toronto-Dominion Bank (TSX: TD). Here’s why the bank stock may be the better option over Telus stock at this juncture.
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Meet TD Bank
TD is one of the big bank stocks. In fact, it’s the second largest of the big banks in Canada. TD operates large segments both in Canada and the U.S., with the domestic business providing stability and the international segment catering to growth.
That duopoly of stability and growth is something investors will appreciate when compared to Telus stock.
TD’s international growth in the U.S. is an intriguing option on its own. The bank expanded that segment in the years following the Great Recession by stitching together a series of smaller acquisitions.
Today, that branch network outnumbers its domestic counterpart by branch count and extends from Maine to Florida along the east coast.
More importantly, that segment caters to millions of customers and accounts for billions in loans and deposits.
That’s not to say that TD’s domestic segment should be dismissed. The Canadian banking segment accounts for the bulk of the bank’s revenue and allows it to invest in growth and pay out a very handsome dividend (more on that in a moment)
In the most recent quarterly update, the domestic segment posted net income of $1.9 billion, on record revenue of $5.3 billion.
Between the diversified and defensive business model, ample growth potential and the stellar results, there are more than a few reasons to buy TD over Telus stock.
The real reason you want to invest in TD
One of the main reasons investors love TD as an investment is its quarterly dividend. The bank is a beacon of stability in this area, with over 165 years of uninterrupted payments behind it.
Further, TD has provided annual upticks to its dividend, without fail, for well over a decade. In fact, the most recent uptick was announced this month, which was a 2.9% uptick.
As of the time of writing, TD’s dividend carries a yield of 3.4%. Prospective investors should note that TD’s payout comes in between 40–50%, giving it a more sustainable appeal when compared to Telus stock.
Will you purchase TD over Telus Stock now?
No stock is without risk. Investors recently learned this lesson when Telus announced it was freezing its popular semi-annual dividend increase. This left Telus stockholders seeking better options like TD.
TD strikes a perfect balance between defensive appeal, growth prospects, reliable revenue generation and a stable dividend.
Buy it, hold it, and watch your well-diversified portfolio grow.
