BC Business
The telecom’s stock is paying out 7.3 percent annually, twice the yield of a five-year GIC
The stock: Remember the 2010s? When everyone was buying their first smartphone and their wireless bills were jumping from $30 to $100-plus a month? That was a sweet time to own telecommunication stocks. In 2024, not so much. Closing at $22.04 on the Toronto Stock Exchange on Tuesday (December 3), Vancouver-based Telus Corp. (TSX:T) is down 7.7 percent year to date. Hey, it could be worse. Rivals BCE and Rogers Communications are down considerably more.
Material change: Canada’s telecom landscape today has these three giants, their discount flanker brands (Koodo, Virgin and Fido), regional operators (Quebecor, Cogeco) and the independent Freedom Mobile checking the pockets of bandwidth-sated Canadian consumers. The industry’s all-important ARPU metric—average revenue per user—is settling downward. And its last hope for top-line growth, the high level of immigration, looks set to come down in 2025 too.
Fortunately, Telus isn’t a one-trick pony. It has its already-public customer-service spinoff Telus International (TSX:TIXT), as well as its in-house Telus Health and Telus Agriculture ventures to offer potential future gains. Although revenue growth in the third quarter was a sluggish 1.8 percent year over year, net income was 87.6 percent higher.
And if you’re an income-oriented investor, get a load of that 7.3-percent dividend yield! Even if the stock lies flat as a land line after a bomb cyclone, you’re making twice the income of a five-year guaranteed investment certificate (GIC) or government bond, and more tax-efficiently too.
Word on the street: “T shares look like the safest place to hide amongst the big three telcos in the near term, with upside beyond our target price being possible if we see either improved industry pricing discipline or fund flows away from money market funds and/or BCE,” says TD Cowen analyst Vince Valentini. He has a “buy” rating and $25 target on the stock.
Coming and going: Chenguang Hou has been named executive director, chairman and chief executive officer of Vancouver-based China Gold International Resources Corp. (TSX:CGG) following the resignation of Junhu Tong in August. Hou has served in executive roles in controlling shareholder China National Gold Group since 2014.