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.
When I was updating my spreadsheet, I noticed that this stock has been a good long term investment for Shareholders. See the chart below, but except for the last 5 years, the other periods I cover show a total return of over 8% per year. I would like to see better debt ratios. However, no stock is perfect and they have been delivering a good return over the long term.
The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 4.91%. The 5, 10 and historical yields are also moderate at 4.41%, 4.22% and 3.95%. The dividend growth is currently moderate (8% to 14% ranges) at 8.40% per year for the last 5 years. The most recent dividend increase was in 2020 and it was for 3.6%. However, this company has a habit of doing two increases each year.
The Dividend Payout Ratios (DPR) are fine without the FCF. The DPR for EPS for 2019 is 76% with 5 year coverage at 78%. The DPR for CFPS for 2019 was 31% with 5 year coverage also at 31%. According to anything I can find on the internet, the Free Cash Flow is not covering the dividends. Using the values from Morningstar and Wall Street Journal, the DPR for FCF for 2019 is 3481% with 5 year coverage at 394%.
Debt Ratios are acceptable. The Long Term Debt/Market Cap Ratio for 2019 is 0.56. The Liquidity Ratio for 2019 is 0.78. If you add in Cash Flow after Dividends, it is 1.25. If you also add back the current portion of the Long Term Debt, it is 1.64. The Debt Ratio for 2019 is 1.39 and this is low and it has always been on the low side with a 5 year median of 1.40. The Leverage and Debt/Equity Ratios are acceptable at 3.56 and 2.56. they have always been high with 5 year medians at 3.16 and 2.16.
The Total Return per year is shown below for years of 5 to 29 to the end of 2019. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 8.40% | 7.98% | 3.72% | 4.26% |
| 2009 | 10 | 18.56% | 16.92% | 11.42% | 5.50% |
| 2004 | 15 | 14.26% | 10.99% | 7.04% | 3.95% |
| 1999 | 20 | 5.93% | 8.56% | 5.40% | 3.16% |
| 1994 | 25 | 5.33% | 9.61% | 5.90% | 3.71% |
| 1990 | 29 | 10.91% | 9.78% | 5.87% | 3.92% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.29, 18.51 and 19.64. The corresponding 10 year ratios are 15.75, 17.05 and 18.51. The corresponding historical ratios are 13.82, 16.75 and 18.51. The current P/E Ratio is 22.18 based on a stock price of $23.73 and EPS estimate for 2020 of 1.07. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $15.06. The 10 year low, median, and high median Price/Graham Price Ratios are 1.37, 1.45 and 1.54. The current P/GP Ratio is 1.58 based on a stock price of $23.73. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 2.76. The current P/B Ratio is 2.52 based on Book Value of $12,046M, Book Value per Share of $9.43 and a stock price of $23.73. The current ratio is 9% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.88. The current P/CF Ratio is 6.82 based on a stock price of $23.73, Cash Flow per Share estimate for 2020 of $3.48 and a Cash Flow of $4.447M. The current ratio is 1% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 3.95%. The current dividend yield is 4.91% based on dividends of $1.17 and a Stock Price of $23.73. The current yield is 24% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 4.22%. The current dividend yield is 4.91% based on dividends of $1.17 and a Stock Price of $23.73. The current yield is 16% above the historical median 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 1.90. The current P/S Ratio is 1.99 based on a stock price of $23.73, Revenue estimate for 2020 of $15,247M, and Revenue per Share of $11.93. The current ratio is 5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable above the median.
Results of stock price testing is that the stock price is probably relatively reasonable. The dividend yield tests show the stock price below the median. The P/S Ratio testing is showing it above the median, but still in a reasonable range. The P/B Ratio, which relies on no estimates is showing the stock price below the median. The P/E Ratio testing showing the stock price as expensive, but the EPS is expected to drop this year. For the 2021 year, the P/E is lower at 18.83.
Is it a good company at a reasonable price? This stock has done well for shareholders over the longer term. Dividends gone up most years. For the 29 years of dividend information I have, the stock’s dividends have gone up in 24 years and down in 2 years. This seems like a good dividend growth stock, which is the kind I like.
When I look at analysts’ recommendations, I find Strong buy (3, Buy (6) and Hold (7). The consensus would be a Buy. The 12 month stock price consensus is $25.50. This implies a total return of 12.17% based on 7.46% from capital gains and 4.91% from dividends.
Most analysts on Stock Chase like this stock. Andrew Button on Motley Fool says the company’s pass association with Huawei in the 5G space will hold them back. A writer on Simply Wall Street talks about institutional ownership of this company. A writer on Simply Wall Street thinks the dividends are not well covered. Ruth Saldanha at Morningstar mentions Telus as a top dividend pick. Nick Waddell on CanTech thinks the telecom stocks have held up well during the latest crisis of Covid.
Telus is one of the big three wireless service providers in Canada, with its 9 million mobile phone subscribers nationwide constituting almost 30% of the total market. 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 Wednesday, September 16, 2020 around 5 pm. Tomorrow on my other blog I will write about Street Patios.... learn more on Tuesday, September 15, 2020 around 5 pm.
Also, on my book blog I have put a review of the book The Mosquito by Timothy Winegard learn more...
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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