TELUS Stock Hikes its Dividend Again!

Conservative investors from all walks of life can consider TELUS (TSX:T) for dividend income, especially if it dips to $27 or lower.

| More on:
A worker gives a business presentation.

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

TELUS (TSX:T) is a blue-chip stock that doesn’t disappoint income investors. It just raised its quarterly dividend again. The hike of 3.6% from its prior-quarter dividend appears to be small. However, investors should note that it equates to a 7.4% increase from a year ago, because the stock tends to increase its dividend every half a year.

The dividend raise marks TELUS stock’s dividend-growth streak of 20 consecutive years! Its five-year dividend-growth rate is 6.6%. Management aims to exceed this rate, as it targets a dividend-growth rate of 7-10% per year through 2025. The company is tuning down its capital investments that will lead to higher free cash flow generation for solid dividend increases.

Created with Highcharts 11.4.3TELUS PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

TELUS’s recent press release highlighted that “since 2004, [it] has returned more $23 billion to shareholders, including over $18 billion in dividends, representing over $16 per share.” It goes to show that given enough time, TELUS common stockholders can very well get their entire investment back from dividends alone. For example, assuming the dividend stock were to increase its dividend by 7% per year, buyers of the stock in their Tax-Free Savings Account today would get their entire investment back by 2035.

Recent results

TELUS just reported its first-quarter results last week. Its operating revenue rose 16% to $4,925 million. However, operating expenses jumped 23% to $4,365 million. Its adjusted net income fell 7% to $386 million. However, its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), a cash flow proxy, climbed 11% to $1,779 million. Capital investments fell 14% to $713 million, leading to free cash flow of $535 million, up 29% year over year.

The company also pointed out that the total telecom subscriber connections increased by 7% to 18.2 million. As well, its TELUS Health business is in an early stage of growth, covering 67 million healthcare lives, which tripled from a year ago.

TELUS’s 2023 outlook

Management continues to forecast good growth for the company as well as strong cash flow generation this year:

  • Operating revenue growth of 11-14%
  • Adjusted EBITDA growth of 9.5-11%
  • Capital investments of $2.6 billion (which would be down 29% from 2022)
  • Free cash flow of $2.0 billion

For reference, TELUS’s dividend payments were approximately $1.2 billion in the trailing 12 months. Projecting similar dividend growth as recently, its 2023 payout ratio should be roughly 64% of free cash flow.

Investor takeaway

Because of TELUS’s predictability, it rarely goes on sale. Right now, at $28.13 per share at writing, analysts believe it trades at a discount of only 10% with a 12-month price target of $31.40. The predictability of its shareholder returns comes from its solid dividend yield of close to 5.2% and growing dividends. The stock and its operating cash flow generation tend to be resilient through economic cycles as well.

Therefore, TELUS stock serves as a good anchor or core holding for a diversified portfolio. Conservative investors should highly consider holding the stock as well. If given the opportunity, investors can aim to pick up shares at or below $27 per share for a bigger margin of safety.

Should you invest $1,000 in Corus Entertainment right now?

Before you buy stock in Corus Entertainment, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Corus Entertainment wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Kay Ng has positions in TELUS. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

analyze data
Dividend Stocks

How I’d Invest $28,000 in Canadian Natural Resource Stock to Amass Personal Wealth

Investing in TSX dividend stocks such as Enbridge can help you earn a passive-income stream in 2025.

Read more »

hand stacks coins
Dividend Stocks

Got $400? How I’d Start Building Income With 3 High-Yield Stocks for the Long Term

These high-yield dividend stocks have a solid payout history, making them compelling investments to generate passive income.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

I’d Put $15,000 in These 3 Dividend-Growth Champions for Increasing Income Potential

Want to offset some volatility? Here are three defensive dividend-growth champions that can generate a juicy yield right now.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $7,000

Discover how the Tax-Free Savings Account can be your golden goose for generating cash without losing your investment.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Invest $10,000 in Canadian Value Stocks for Monthly Dividend Income

A $10,000-diversified portfolio of value stocks focusing on dividend safety, yield, growth, and payment schedules can provide a reliable source…

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »