- Investors have turned bullish on Suncor Energy and TELUS Corporation stocks.
- Suncor Energy stocks rose after Warren Buffet’s Berkshire Hathaway announced that it has increased its stake in the energy company.
- Telecom giant TELUS have been riding on a positive wave as more people shift online amid pandemic conditions.
- Both the stocks have impressive dividend yields of 4+ per cent.
Stocks of Suncor Energy Inc. (TSX: SU) and TELUS Corporation (TSX: T) are on a tear these days. Investors have turned bullish on these two dividend-paying large cap companies, resulting in heavy trading volumes in the month of August.
There are primarily two ways of earning income through stocks: capital appreciation and dividend generation. One invests in a stock at the right time for a certain price, which later can appreciate in value and generate good returns. While some investors choose to invest in dividend stocks to make money. Which is why most investors consider the dividend-paying bluechip companies as the holy grail of income-generating stock investments.
Traction on Suncor Energy went up after Warren Buffet’s Berkshire Hathaway announced that it has increased its stake in the energy company. The group now owns a 1.3 per cent stake in the C$ 32-billion energy giant.
Telus, on the other hand, has established itself as the dividend king, even as multiple companies (including Suncor Energy) snipped or cancelled dividend payouts due to current COVID crisis.
Let’s take a detailed look at these two dividend-paying blue-chip stocks trending high on the Toronto Stock Exchange.
Suncor Energy Inc. (TSX: SU)
Industry: Oil & Gas
Suncor Energy stocks have lost over 50 per cent of their value this year as the entire energy industry struggled with COVID conditions and hostile commodity prices (Saudi Arabia-Russia oil price war). The numbers are no better in quarterly and monthly scales. The stock lost 2.4 per cent of its value month-to-date (MTD) and dropped 12.2 per cent quarter-to-date (QTD).
The company’s second quarter of 2020 results were significantly impacted by the pandemic and low commodity prices. It posted an operating loss of C$ 1.489 billion, in contrast to operating earnings of C$ 1.253 billion in Q2 2019. It also slashed its quarterly dividend payment by 55 per cent, distributing C$ 0.21 per share.
Despite this, Suncor Energy ranks high on two TSX stock lists: top energy companies and top 10-day volumes. The company has regained nearly 39 per cent of the lost value from its March lows and currently trading at C$ 20.93.
With a current dividend yield of 4 per cent, company presents a good long-term value for investors.
The company’s current price-to-book (P/B) ratio is 0.87, while price-to-cash flow (P/CF) ratio is 5.6. The current Return on Equity is negative 13.02 per cent and Return on Assets is negative 6.02 per cent.
Suncor Energy is among Canada’s largest integrated oil producer and transporter of fossil fuels and has over 1,500 retail locations across Canada. It also has an interest Syncrude, the mega producer of synthetic crude oil in Canada's oil sands.
Suncor stocks are likely to sway along with the movement in commodity price. Many investors expect once the economy enters the post-pandemic era, commodity prices will rise as the current supply chain hiccups are erased and transportation picks up.
TELUS Corporation (TSX: T)
Sector: Communication services
Industry: Telecommunication services
Scrips telecom giant TELUS have been riding on a positive wave since its latest earnings report. The company posted mixed financial results in second quarter of 2020, with net income falling 43.9 per cent year-over-year (YoY) to C$ 290 million but top line surging by 3.6 per cent YoY to C$ 3.7 billion.
The TSX Communication Services Index is down by 10.27 per cent this year. In comparison, TELUS stocks doffed 4.8 per cent in the same period, proving attractive for investors. The stocks are trading flat both QTD and MTD.
The C$ 30.5-billion telecom company’s current earnings per share (EPS) is C$ 1.18, while P/B ratio is 2.56 and P/CF ratio is 6.60. The current Return on Equity is 12.58 per cent and Return on Assets is negative 3.73 per cent. TELUS distributed C$ 0.29 quarterly dividends and has an impressive yield of 4.85 per cent.
TELUS is a leading Canadian telecom provider offering wireless and wireline networks along with TV and internet services. The mobile operator also has health care wing called Telus Health, which delivers digital solutions to hospitals, doctors, health insurance firms.
Its services have been in demand in since the pandemic struck the nation with most people staying at home. TELUS is likely to gain in the long run as the world moves towards a homebody economy and more companies shift to work-from-home setup.
In a recent Canada: Mobile Network Experience Report, released by Opensignal in August 2020, TELUS won four top awards for video, voice app, download speed and upload speed experiences. It was also ranked as Canada’s fastest mobile network and internet provider by PCMag.
As of now, the company is investing C$ 40 billion in 5G networks over the next three years. TELUS stocks are currently trading at C$ 23.92.