TELUS' (TSE:T) Dividend Will Be Increased To CA$0.3511
TELUS Corporation (TSE:T) has announced that it will be increasing its dividend from last year's comparable payment on the 3rd of January to CA$0.3511. Based on this payment, the dividend yield for the company will be 4.9%, which is fairly typical for the industry.
See our latest analysis for TELUS
TELUS' Payment Has Solid Earnings Coverage
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Prior to this announcement, TELUS' dividend was making up a very large proportion of earnings, and the company was also not generating any cash flow to offset this. Generally, we think that this would be a risky long term practice.
Earnings per share is forecast to rise by 20.0% over the next year. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 85% - on the higher side, but we wouldn't necessarily say this is unsustainable.
TELUS Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was CA$0.58, compared to the most recent full-year payment of CA$1.4. This means that it has been growing its distributions at 9.2% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
TELUS Could Grow Its Dividend
Investors could be attracted to the stock based on the quality of its payment history. TELUS has impressed us by growing EPS at 5.3% per year over the past five years. EPS has been growing at a reasonable rate, although with most of the profits being paid out to shareholders, growth prospects could be more limited in the future.
The Dividend Could Prove To Be Unreliable
Overall, we always like to see the dividend being raised, but we don't think TELUS will make a great income stock. Although they have been consistent in the past, we think the payments are a little high to be sustained. We would be a touch cautious of relying on this stock primarily for the dividend income.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 4 warning signs for TELUS (of which 2 shouldn't be ignored!) you should know about. Is TELUS not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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