TU - TELUS Corporation: Is This Attractive 6.9% Dividend Safe?

2024-04-19 14:41:56 ET

Summary

• Critics say Canada's telecom stocks, including TELUS Corporation, are at risk due to higher interest rates, high capex expenses, and weak share prices.
• TELUS Corporation is a diversified telecom company with subsidiaries in health, agriculture, and technology.
• TELUS generated $20B in revenues in 2023, but its dividend may be in danger due to a history of not earning enough free cash flow to cover it.

Emboldened by higher interest rates, high capex expenses, and weak share prices, many critics say Canada's telecom stocks - and their generous dividends - are at risk. I examine TELUS Corporation ( T:CA ) ( TU ) and its succulent 6.9% dividend to see if the payout can weather today's storm.

Introduction

TELUS Corporation can trace its history way back to 1906. Its predecessor company, Alberta Government Telephones (AGT) was formed after the Alberta government acquired various telephone assets in the province. AGT grew to eventually serve virtually all citizens of Alberta outside of the Edmonton area, where telephone service was provided by an arm of the municipal government....

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