2022 was a ho-hum year for Canadian telecommunications stocks — although with dividends added the sector virtually broke even, notes Gordon Pape, Canadian stock expert and editor of Internet Wealth Builder.
If you can only choose one for your portfolio, I’d give the nod to Telus (TU), which is Canada’s second largest wireless telecom company. Its core business includes internet and mobile phone service through the Telus and Koodo brands.
The company recently spun off Telus International (TIXT), which provides IT and customer service. It is using that as a model to grow its healthcare and agriculture businesses with an eye to spinning them off as well.
Telus continued its strong growth pattern in the third quarter. The company reported total Mobile and Fixed customer growth of 347,000. That was up 27,000 over last year and was its strongest quarter on record. Mobile phone net additions were 150,000, a 15,000 increase over the prior year and the best quarterly result since 2010.
Telus reported third quarter income of $4.7 billion, an increase of 9.9% over $4.3 billion in the same period last year. Adjusted net income was $0.34 a share which compares to $0.29 a share in 2021 — an increase is 17.2%. Free cash flow was $331 million compared to $203 million a year ago, an increase of 63.1%.
The company also reported good results from Telus International and subsequently announced it has acquired 1.4 million additional shares in the spin-off company.
Telus announced a 7.2% increase in the quarterly dividend, to $0.3511 ($1.4044 a year), effective with the December payment. The stock yields a very attractive 5% at the current price.
The company’s growth rate is impressive, and the likely future spin-offs of the health and agriculture units should benefit shareholders. The stock is interest sensitive. As a result, it has been on a downward trend since touching an all-time high of $34.65 last April. The stock looks extremely oversold at the current price.
