Telus Corp (T.TO)

Recently sold. Really high multiple of 22x adjusted 2024 earnings. Debt servicing costs are going up. Regulatory environment in Canada is uncertain. 

Consolidation in the communication space, driving price competition. Market share gains are really tough. Thinks Rogers will come in and try to capture market share out West. As interest rates tick higher, dividend yield is less compelling when you can get the same return from bond-type investments.

A great company with revenue up 16% last quarter. It deserves a premium multiple based on their low churn. He models EPS growth at 9.5% from 2023-5. Great. But Quebecor will offer more competition and this trades at a rich 24x PE. Are better stocks.

The weakness does look to be across telcos in general, vs a Telus specific problem. We think it is a combo of concerns on slower growth, tougher inflation passthrough going forward, higher rates and relative attractiveness of dividends vs what you can get in bonds. Add in poor sentiment as well given recent performance. We don't think its a specific 'issue' at the company though. It probably does make sense to start slowly picking away at these types of names.
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He exited because fixed income returns matched Telus dividend. Also, he's concerned that consumer pressure on prices may eventually open the door to competition. 

High yielders with high interest rates make it a tough environment. Not worried about the Rogers merger. Spent lots of capex on their network. Will continue to do well. BCE has laid off people, changing how their business will look. Really nice dividend yield.

Avoid, along with all Canadian telecom names. Pricing pressure coming. Rogers' enhanced footprint will have most impact on Telus. 

Telecom companies don't perform well in early part of cycle (currently in bull market recovery).
Strong dividend yield (~5.7%) that is very safe.
Good for income investors. 

Set back to a very strong technical support level. Earnings have been weak and FMV has been slipping. Nice yield. As long as it holds around $25-26, you should be all right. If it doesn't, could go to $19. Fairly long history of holding at 2x book or better. Good company, well run.

Has come under pressure lately, but has been adding to it in the past month. Has good value. Attractive dividend and dividend growth. Would buy on current weakness.

He likes the telcos, but we're in a period of slower growth as the feds fight inflation. So, you need to own recession-resistant stocks with stable earnings, that pay high dividends at low valuations. He owns all the Canadian telcos, but Telus has slightly better growth prospects from diversifying internationally

Pays a good yield, but it's like many telcos. He prefers T-Mobile for better growth.

Editor's Note: The question was on his preference between T and CU. Total revenue at Telus was up 16% and the capex is down which is good. It is pricey at 25X. CU is a low risk utility and has a very nice dividend and price. Since it has low growth he prefers Telus.

Utility style business with mediocre returns on capital (single digits).
Most of returns achieved through dividends.
Limits to how much company can grow.
Defensive stock - safe for investors. 
Better names out there for capital appreciation. 

Telecom sector is good exposure for income investors. BCE has the higher yield, close to 6%. Telus yields about 4.5%. Both increase dividend each year, generate free cashflow, build out 5G network. Immigration will be positive for the sector.

Believes inflation and rates are going to be higher for longer (HFL). Historically strong dividend payer. Will move up more slowly than others. Downtrend from 2022-23, and you can see the chart taking a turn and pushing higher. Likes the telcos here, and Telus has been one of the leaders.