Buy this Canadian blue chip stock for growth and income

Telus benefits from its focus on customer service. Its wireless churn rates are the lowest in the industry. Indeed, when it comes to wireless service, management of this blue chip Canadian utility stock can boast of unmatched customer loyalty in the Canadian telecommunications industry.

Telus Corp. (TSX─T) has continued to deliver strong financial results, and the company attributes part of its success to its focus on customer service.

For two years now, Telus’ wireless postpaid customer churn rate, or the percentage of subscribers that discontinue their service in a given time period, has remained below one per cent. BCE and Rogers, by contrast, have churn rates in excess of one per cent.

Telus is Canada’s fastest-growing national telecommunications company, with $12.3 billion of annual revenue and 13.9 million customer connections, including 8.4 million wireless subscribers, 3.1 million wireline access lines, 1.5 million high-speed Internet subscribers and 954,000 Telus TV customers. The company provides a wide range of communications products and services, including wireless, data, Internet protocol, voice, television, entertainment and video, and is Canada’s largest healthcare IT provider.

Blue chip dividend stock’s revenue and earnings rising

Telus has reported solid results so far this year, with revenue and earnings rising on good performances from both wireless and wireline. For the six months ended June 30, 2015, Telus made $833 million (adjusted), or $1.37 a share, compared with $770 million, or $1.24 a share, in the same period of 2014.

Revenues rose 4.9 per cent to $6.1 billion. Wireless network revenue increased 6.2 per cent to $3.1 billion, while wireless equipment and other revenues rose 22 per cent to $291 million.

The increase in wireless network revenue resulted from growth in the wireless subscriber base, an increased proportion of higher-rate two-year plans in the revenue mix, increased data roaming, and higher wireless data usage from the continued adoption of smartphones and other data-centric wireless devices.

Canadian utility stock raises its capital budget

Telus has updated its 2015 capital expenditures guidance. It now expects to spend about $2.5 billion, up from a previous estimate of $2.4 billion. The increase reflects continued investments in broadband infrastructure to support the increased demand for data service and higher network speeds. And despite the increase, the company still expects this year’s earnings per share to be within its original target range of $2.40 to $2.60.

Telus should earn $2.58 a share in 2015, and it trades at a reasonable 16.5 times that estimate. Its current annual dividend of $1.68 a share yields 4.0 per cent.

This Canadian blue chip dividend stock is a buy for growth and income. 

 

Money Reporter, MPL Communications Inc.
133 Richmond St. W., Toronto, On, M5H 3M8, 1-800-804-8846

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