Is Telus (TSX: T) a must-buy as it raises its dividend?

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Is Telus (TSX: T) a must-buy as it raises its dividend?

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Is Telus (TSX: T) a must-buy as it raises its dividend?

Highlights

  • Telus Corporation (TSX: T) created a buzz on the Canadian stock market after the company raised its quarterly dividend by 7.1 per cent year-on-year (YoY).
  • The telecom giant posted a YoY rise of 5.8 per cent in its operating revenues in Q1 2022.
  • Stocks of Telus Corp spiked by about 22 per cent YoY.

Telus Corporation (TSX: T) created a buzz on the Canadian stock market after the company raised its quarterly dividend by 7.1 per cent year-on-year (YoY) to C$ 0.3386 per share while delivering its first-quarter results for FY2022 on Thursday, May 6.

The Canadian telecom operator also revealed that it intends to target the current half-yearly dividend growth with an annual increase of seven to 10 per cent from 2023-to 2025. However, the dividend decision is subject to Telus Board’s assessment of its financials and outlook every quarter.

Let us discuss Telus Corp’s overall performance in Q1 FY2022.

Telus Corp(TSX: T)’s financial highlights for Q1 2022

The telecom giant posted a YoY rise of 5.8 per cent in its operating revenues to C$ 4.25 billion in Q1 FY2022, arising from customer contracts. Its operating revenue and other income zoomed by 6.4 per cent YoY to C$ 4.28 billion in the latest quarter.

The communication service company saw its net profit at C$ 404 million in the first three months of 2022, marking a 21.3 per cent jump from C$ 333 million in Q1 2021. Its EBITDA was C$ 1.56 billion, and adjusted EBITDA amounted to C$ 1.6 billion in the latest quarter. 

Telus posted a capital expenditure of C$ 833 million in Q1 2022, excluding spectrum licenses. The large-cap company generated cash of C$ 1.13 billion from operating activities and recorded a free cash flow (FCF) of C$ 415 million in the latest quarter. Notably, the company reported total telecom subscriber connections of 17 million as of March 31 compared to 16.07 million a year ago.

Telus (TSX: T)’s Q1 2022 results

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Telus Corp’s stock performance

Stocks of Telus Corp spiked by about 22 per cent YoY, outperforming the S&P/TSX Capped Communication Services Index, which gained by about 11 per cent.

The telecom stock appears to be regaining investors’ attention with an upward-moving Relative Strength Index (RSI) value of 38.52, according to Refinitiv data.

Bottomline

Telus recorded net additions of 46,000 in mobile phones, 30,000 in the internet, 10,000 in television (TV) and 26,000 security segments in Q1 2022. The company also mentioned that it had returned over C$ 21 billion to shareholders since 2004 via its dividend and share buyback programs.

Also read: Shopify (TSX: SHOP) posts Q1 revenue surge of 22% YoY. Time to buy?

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.  

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