TELUS Corp's Dividend Analysis
Assessing the Upcoming Dividend and Financial Health of TELUS Corp
TELUS Corp (NYSE:TU) recently announced a dividend of $0.38 per share, payable on 2024-01-02, with the ex-dividend date set for 2023-12-08. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into TELUS Corp's dividend performance and assess its sustainability.
What Does TELUS Corp Do?
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TELUS Corp is a leading telecommunications company in Canada, offering a wide array of services including wireless, internet, television, and landline phone services. With a significant market share in the wireless sector and a diversified portfolio that extends into international business services, health, security, and agriculture, TELUS Corp is a prominent player in its industry. The firm's strategic investments in these areas show a commitment to growth beyond its traditional telecom roots.
A Glimpse at TELUS Corp's Dividend History
TELUS Corp has demonstrated a strong commitment to shareholder returns, with a consistent dividend payment record dating back to 1999. Dividend distributions occur quarterly, and the company's status as a dividend achiever highlights its reliability for income-focused investors. This accolade is reserved for companies that have not just maintained but increased their dividends annually for over two decades, demonstrating TELUS Corp's financial resilience and commitment to shareholders.
Breaking Down TELUS Corp's Dividend Yield and Growth
TELUS Corp's current trailing dividend yield stands at an attractive 5.63%, with a forward dividend yield of 5.80%, indicating investor expectations of increasing dividends. Over the past three, five, and ten years, the company has seen its dividends grow at rates of 6.40%, 6.60%, and 8.10% per annum, respectively. These growth rates reflect a robust history of increasing shareholder value through dividends, and the 5-year yield on cost for TELUS Corp stock is an impressive 7.75%.
The Sustainability Question: Payout Ratio and Profitability
The dividend payout ratio is a critical measure of dividend sustainability, indicating the proportion of earnings paid out as dividends. TELUS Corp's current payout ratio is 2.65, which may raise concerns over the long-term sustainability of its dividend payments. However, the company's profitability rank, at a strong 8 out of 10, suggests solid earnings potential. Consistent positive net income over the past decade underpins TELUS Corp's financial stability and supports the future of its dividends.
Growth Metrics: The Future Outlook
TELUS Corp's growth rank is a robust 8 out of 10, signaling a favorable growth trajectory. However, its revenue and earnings growth rates have been underperforming compared to many global competitors. With an average annual revenue growth rate of 2.50% over the past three years and a 3-year EPS growth rate averaging -12.10%, TELUS Corp faces challenges in these areas. Additionally, the 5-year EBITDA growth rate of -6.40% suggests that TELUS Corp must navigate through some headwinds to maintain its dividend growth momentum.
Engaging Conclusion: Dividend Prospects Amidst Growth Challenges
In conclusion, while TELUS Corp's dividend history and yield are attractive, the payout ratio and mixed growth metrics present a nuanced picture for investors. The company's strong profitability rank and consistent dividend increases paint a positive picture, but the underperformance in revenue and earnings growth rates may warrant a closer examination of its long-term dividend sustainability. As value investors consider TELUS Corp (NYSE:TU) for their portfolios, they must weigh these factors carefully. Will TELUS Corp's strategic initiatives in diverse industries bolster its financials enough to continue its impressive dividend track record?
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
