When you think of telecom stocks, what comes to mind? Boring? Stagnant? Low growth? If so, think again. In this article, I’ll discuss Telus Corp. (TSX:T), a telecom company that’s seen tremendous growth and that’s setting itself up for more growth in innovative and exciting ways. This is why I believe the outlook for Telus stock is very positive for 2025 and beyond.
Here are some details that I think you’ll find pretty fascinating.
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Telus makes it through a difficult 2024
Slower growth and fierce competition have come to characterize the Canadian telecommunication industry. Pricing wars have hit top-line growth, and many telecom companies are focusing on efficiency and cost-cutting, as well as divesting of non-core assets, in response.
Telus has done a fine job in this challenging environment. In the first nine months of 2024, adjusted earnings per share increased 11.3% to $0.79. Telus was able to post this increase despite the fact that revenue of $14.9 billion was flat versus the prior year. Also, the company posted a very healthy 18.4% increase in its operating cash flow.
Finally, the company increased its dividend by 7% in its latest quarter to the current $1.61 per share. This was the 27th increase since Telus’s dividend program was initiated in 2011. Since 2004, the company has returned more than $42.6 billion to shareholders, including $18 per share in dividends. Telus stock is currently yielding a very generous 8.17%, which is high for a company of such solid financial standing. This is part of the reason why Telus stock is such an attractive opportunity for investors right now.
What to expect this year and beyond
All of this, plus Telus’s strong balance sheet, arms the company well for investing in growth this year and beyond. The company has many ideas, some of which have already been proven as well as some new ones. This is increasingly diversifying the company’s revenue while adding extra growth to this telecom giant.
For example, Telus Health continues to post strong growth. In the third quarter, Telus Health achieved 4% revenue growth, with sales bookings up 32% in employer solutions and doubling in digital healthcare clinics. Also, lives covered increased 9%. Earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 50%.
Telus Health is Telus’s response to a Canadian healthcare system that’s overloaded and technologically lacking. From virtual healthcare to electronic medical record solutions, the company is stepping in to help solve these problems. And its extensive network of broadband and digital telecommunication assets is behind it all.
Similarly, in Telus agriculture and consumer goods, revenue increased more than 20%, and bookings increased 65% year to date. This segment also saw its EBITDA double.
The opportunity for Telus
Looking ahead, Telus’s product portfolio related to connected devices and the Internet of Things industry will increasingly contribute to the company’s profitability. It continues to innovate on this front and is further developing its product portfolio, which is driven by data and artificial intelligence capabilities. In short, Telus is branching out to new and related businesses, all the while paving the way for a digitally connected world at the highest levels.
Clearly, the company is undergoing the biggest transformation in its history. Telus’s digital transformation, the evolution of its product portfolio, cloudification, and its wideband fibre infrastructure are all allowing the company to drive down its capital intensity.
Finally, the fibre network that Telus has so heavily invested in is driving down unit costs. In fact, the unit cost to serve is 30% lower than what it was under the copper infrastructure. Clearly, the economics of copper decommissioning are powerful.
The bottom line
For all the reasons discussed in this article, my view is that 2025 and beyond will be good years for this dividend stock.
