TELUS (TSX:T) Gearing Towards High-Growth Verticals

Posted on November 10, 2021 by Mathieu Litalien

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Earnings season is well underway as many notable Canadian stocks report earnings. Thus far, the results have been decidedly mixed. We’ve seen some strong reports, only to see stocks crash on weak guidance.

One stock that did fairly well is TELUS (TSE:T). One of Canada’s leading telecommunication firms, TELUS gained 2.26% on the day of earnings despite mixed quarterly results.

Q3 results from TELUS (TSX:T)

Third Quarter earnings of $0.29 per share beat by a penny while revenue of $4.251 billion came in slightly below estimates for $4.292 billion. That was a revenue miss of less than one percent, and the markets shrugged it off.

Instead, the markets focused on the positives which start with fixed customer growth of 320,000 which was an increase of 43,000 over the same quarter last year. It also marked the highest quarter of customer growth in company history. For a company the size of TELUS, that is an impressive accomplishment.

The company also added 24,000 mobility customers and delivered a record connected device net additions of 110,000. If that wasn’t enough, it also had net additions of 75,000 wireline customers thanks to its PureFibre network.

Overall, the company’s customer growth profile is one of the best in the industry. From a financial standpoint, revenue, net income, and EBTIDA all grew by mid-to-high single digits YoY.

Multiple verticals leading the way

How has the company performed so well? Darren Estwistle, President and CEO says it best:

“Our results are buttressed by our highly differentiated and potent asset mix geared towards high-growth, technology-oriented verticals,”

TELUS isn’t just a one trick pony. The company spun out Telus International (TSE:TIXT) this year, which announced solid double-digit revenue growth and its two other segments TELUS Health and TELUS Agriculture are also budding companies.

Both are growing at a double-digit pace and it is likely that when these two hit a certain scale, they will be spun out as their own separate publicly-traded companies – much like TELUS International was earlier this year.

While the company doesn’t break out the financials around these two business lines, the company did provide some interesting tidbits;

  • TELUS Health realized closer to 138 million digital health transactions, a 64% increase YoY.
  • TELUS Agriculture is on pace to generate $400M in revenue this year.

TELUS (TSX:T) leading peers in dividend growth

Finally, the company continues to lead its peers in terms of dividend growth. TELUS has a targeted dividend growth rate between 5-7% and historically, has always outraised the Big Three.

This quarter, TELUS declared a dividend of $0.3274 per share, up from $0.3162 previously. This was the second raise of the year and overall, the company raised the annual dividend by 5.2% in 2021. TELUS has effectively extended their dividend growth streak to 18 years.

In my opinion, TELUS remains one of the best telecommunications stocks in the country. It provides reasonable growth, is well diversified and has one of the best dividends in the industry.

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Mathieu Litalien

About the author

Mathieu is an individual investor and has been investing part-time for the better part of the past 20 years. He is primarily interested in fundamental analysis, focusing on the long-term and his portfolio is composed primarily of dividend-paying equities. Mathieu has a moderate risk profile and also looks for growth and value. His passion for finance and the markets have led him to his MBA and writing for Seeking Alpha and Stocktrades. Mathieu also focuses primarily on stock research and content production for Premium and the Stocktrades blog.