High-yield dividend stocks are an excellent choice for generating immediate income. The TSX has several companies offering high yields near their current market price. However, a few stocks have sustainable payouts and are focused on enhancing shareholder value through higher dividends.
Against this background, here is a top Canadian stock with a growing earnings base, solid dividend payment and growth history, and a well-protected yield of over 8%. Passive-income investors can rely on this fundamentally strong stock to earn worry-free income for years.
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The 8% dividend yield stock
Among reliable income stocks, Telus (TSX:T) is my top pick for immediate income. The Canadian communication giant’s solid dividend-growth history, sustainable payouts, and high yield make it a solid option for investors seeking regular passive income.
It’s worth highlighting that Telus has paid over $21 billion in dividends since 2004. Further, it has raised its dividend 27 times since 2011 under its multi-year dividend-growth program. Telus stock currently pays a quarterly dividend of $0.402 per share, translating into a high yield of over 8%.
Why is Telus a top income stock?
The recent pullback in Telus stock has driven its yield higher. Notably, macro headwinds and heightened competitive activity pressured Telus stock. However, Telus has shown resilience and is expanding its earnings, which supports its payouts.
The company consistently delivers sustainable, profitable growth thanks to its emphasis on margin-accretive customer expansion and its leading broadband networks. Further, Telus continues to add new customers and has an impressively low churn rate (for TELUS branded mobility and home-bundled households) of less than one.
The lower churn reflects its ability to retain customers despite higher competition through its bundled product offerings and its solid pure fibre and wireless broadband networks. Thanks to these strengths, Telus generates higher cash flows and enhances shareholder value.
Telus is focusing on improving its average revenue per user (ARPU) and average margin per user (AMPU). This will drive its earnings and future payouts.
The company is enhancing its premium bundled offers across mobility and fixed services to drive accretive household economics through the optimization of its product portfolio and brand mix. Moreover, its flanker brands also contribute to growth by delivering value in key segments, such as public mobile, which offers attractive AMPU potential.
Telus is lowering its cost to serve across the board through digital transformation. These include competitive bring-your-own-device (BYOD) plans and strategic flanker activities.
Moreover, Telus’s strategy of bundling fixed and mobility products strengthens customer lifetime revenue and margin. This approach is complemented by focusing on acquiring and retaining profitable customers. These measures will drive Telus’s bottom line and payouts.
The bottom line
Telus is well-positioned to enhance shareholder value through higher dividend payments. Its expanding subscriber base and investments in advanced network infrastructure ensure continued growth. Further, Telus will benefit from a loyal customer base and improving metrics such as ARPU and AMPU, which contribute to stronger earnings. With its solid fundamentals, Telus will likely deliver consistent earnings growth and increase its dividend payouts. Its resilient payouts make Telus a must-have stock for immediate income.
