Telus (TSX: T) stock has been drawing in crowds in recent months, thanks in part to its colossal dividend yield, which could stay elevated for a while longer. Of course, the 9.3% dividend yield seems too good to pass up, especially if you’re a retired income investor who needs a raise, preferably with a blue-chip darling (or former darling) instead of a name that’s on the ropes when it comes to sustaining the payout. While Telus’s payout is stretched, my bet is that it’s going to survive for more than another year.
Of course, there is a small compromise with the dividend: it’s not going to grow anytime soon. But a growth pause is far easier to stomach than a dividend reduction. For investors, this is a worthy middle ground as management looks to get things back on the right track.
With the Telus Digital cyberattack causing ripples, the difficult turnaround story just became a bit harder to justify buying. But if you’re willing to take a long-term perspective, perhaps the latest slide (and opportunity to get a yield of more than 9%) is an opportunity.
Source: Getty Images
Canadian Tire: A solid dividend, buybacks, and underrated resilience
In the meantime, Telus stock could stay between a rock and a hard place. And for investors who want a bit more stability rather than elevated volatility, Canadian Tire (TSX: CTC.A) might be a worthy alternative.
Shares of the retailer trade at 17.9 times trailing price to earnings (P/E) at the time of this writing. But the main attraction, I think, is the dividend (3.85% yield), which isn’t just on the bountiful side; it’s poised for growth, especially as the retailer continues to post outstanding quarterly results.
Canadian Tire shares have been a wild ride in the past year, with big ups and downs. The steep correction last August might have been terrifying at the moment, but for investors who’ve been around for a while, the taking of the elevator down and the escalator up isn’t all too much of a shocker.
That’s how stocks tend to react, after all. As it turned out, the summertime correction turned out to be overblown, as Canadian Tire regained the ground just a few months later. And while shares of the retail juggernaut are coming in again after failing to break out in a big way, I think income seekers should give the name a second look.
Big buybacks and other positives to look forward to
With a $400 million share-buyback program in place (does that suggest undervaluation?), solid operational improvements, and the potential for more rebound gains as consumer spending improves, there are many reasons to buy shares of CTC.A right here. Of course, the dividend increases, strategic investments (think expanding that Triangle loyalty program), and embracing the high-tech age of AI are other reasons to think about picking up a few shares.
While there’s no telling what the next move will be after a slight 5% dip, I think that Canadian Tire is evolving into more of a resilient retailer than most would give it credit for. Whether it’s the competitively priced goods, exclusive brands, or the rock-solid automotive business, which can stand tall even in tough times, Canadian Tire looks like a retailer that can keep standing tall, even if the early scare in the latest jobs report turns into something more horrific later on.
