I do not own this stock of Telus Corp (TSX-T, NYSE-TU). I started to follow this stock because of a list of stock John Sartz talked about in 2008. At the Toronto Money Shows in 2009 and 2010 Aaron Dunn from Keystone Financial Publishing Corp talked about having recommended this stock. Aaron Dunn says he likes companies with resilient business models, which are profitable and are growing their earnings. He also like companies with strong management teams, health balance sheets and compelling valuations. Telus Corp (TSX-T) was one of three stocks he recommended in 2009.
When I was updating my spreadsheet, I noticed that the dividend increases are slowing down. See the chart below. The last 5 year is lower per year than the last 10 years. Also, the last increase, which was in this year was for 7.1% and this is lower than the average per year for the last 5 years which is at 9.3%.
The thing is that both Revenue and EPS has only been increasing for the past 5 and 10 years at rates in the 4 and 5% ranges. Dividends cannot increase faster than Revenue and EPS over the long term.
The dividend yield is in moderate range (2 to 4% ranges). The current dividend yield is 4.60%. The 5, 10 and historical median dividend yields are 4.27%, 4.22% and 3.92%. Dividend growth is in the moderate range (8 to 14% ranges) with the growth for the past 5 years at 9.31% per year.
The Dividend Payout Ratios are fine. The DPR for EPS for 2018 is 77% with 5 year coverage at 76%. I wish it was lower but it is probably fine. The DRR for CFPS for 2018 is 32% and with 5 year coverage at 30%. This is fine.
Debt Ratios are fine but there is vulnerability here. The Long Term Debt/Market Cap Ratio for 2018 is 0.49. The Liquidity Ratio for 2018 at 0.79 is low. It means that the current assets cannot cover the current liabilities. Adding in cash flow after dividends only rises this to 1.39. I would like to see this at 1.50 or above. The Debt Ratio is also a bit low at 1.46. I would also like to see this at 1.50 or above. The Leverage and Debt/Equity Ratios are 3.20 and 2.20. It would be nice if these were lower.
The Total Return per year is shown below for years of 5 to 24 to the end of 2018. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 9.31% | 8.80% | 4.36% | 4.44% |
| 2008 | 10 | 18.13% | 14.32% | 9.31% | 5.01% |
| 2003 | 15 | 13.71% | 13.03% | 8.68% | 4.35% |
| 1998 | 20 | 5.98% | 6.85% | 3.94% | 2.91% |
| 1994 | 24 | 5.24% | 9.44% | 5.69% | 3.76% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.20, 18.51 and 19.64. The corresponding 10 year ratios are 15.27, 17.05 and 18.51. The corresponding historical ratio are 15.27, 17.42 and 19.74. The current P/E Ratio is 16.65 based on a stock price of $48.94 and 2019 EPS estimate of $2.94. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $34.00. The 10 year low, median, and high median Price/Graham Price Ratios are 1.31, 1.43 and 1.54. The current P/GP Ratio is 1.44 based on a stock price of $48.94. This stock price testing suggests that the stock price is relatively reasonable but above the median
I get a 10 year median Price/Book Value per Share Ratio of 2.67. The current P/B Ratio is 2.80 based on a stock price of $48.94, Book Value of $10,504M and Book Value per Share of $17.48. The current ratio is some 4.7% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median
I get an historical median dividend yield of 3.92%. The current dividend yield is $4.60% based on a stock price of $48.94 and dividends of $2.25. The current ratio is 17% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median
The 10 year median Price/Sales (Revenue) Ratio is 1.85. The current P/S Ratio is 1.99 based on 2019 Revenue estimate of $14,784M, Revenue per Share of $24.60 and a stock price of $48.94. The current ratio is some 7.7% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median
Results of stock price testing is that the stock price is probably reasonable. The P/S Ratio testing is show as reasonable but above the median when the dividend yield is showing the price as reasonable and below the median. The rest of the testing show similar things.
Is it a good company at a reasonable price? I think that this is a good dividend growth stock that could be held for the long term. Currently the price seems reasonable. On the other hand, it does seem to be slowing down currently in regards to dividend growth.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (5) and Hold (10). The consensus would be a Buy. The 12 month stock price is $51.58. This implies a total return of 9.99% with 5.39% from capital gains and 4.60% from dividends.
See what analysts are saying on Stock Chase. They like this company but say the stock is expensive. Andrew Button on Motley Fool likes the company’s dividend growth. A writer on Simply Wall Street talks about why income investors should have this stock. A writer on Simply Wall Street says that the stock is trading below his calculated Intrinsic Value. Dennis Silva on Altcoin Mercury talks about TD Asset Management being bullish on this stock.
Telus is one of the big three wireless service providers in Canada, with its 9 million subscribers nationwide constituting almost 30% of the total market. It is also the ILEC (incumbent local exchange carrier; the legacy telephone provider) in the western Canadian provinces of British Columbia and Alberta, where it provides Internet, television, and landline phone services. It also has a small wireline presence in eastern Quebec. Its web site is here Telus Corp.
The last stock I wrote about was about was Accord Financial Corp (TSX-ACD, OTC-ACCFF) ... learn more. The next stock I will write about will be Wajax Corp (TSX-WJX, OTC-WJXFF) ... learn more on Monday, September 16, 2019 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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