Saturday, March 23, 2013

Telus – The Best Canadian Dividend Growth Stock?


Over a year ago, I bought my first shares of Telus at $56. Given the stock chart looked like one of the steep hills I used to run up during cross-country races, I wasn’t sure how much upside was left in this stock. The dividend yield at that time was a little over 4%, and the CEO had previously announced an investor friendly policy of increasing the dividend by 10% a year, for 3-years. 

Fast forward to March 15th, when I read in my morning portfolio alerts that the company announced an upcoming 2-for-1 stock split.  My initial investment was up over 20% (without including the dividend that had been raised in-line with the company’s generous policy). Thinking back to my Chartered Financial Analyst studies, I remembered that when dividend growers announced stock splits, the usual outcome is a nice boost in share price even before the split actually occurs. Despite Telus having a dividend yield of only 3.7%, I decided to increase my holding in the company so that it was relatively even to my holdings in Rogers and Bell (Canada’s two other big Telco’s).

The shares are already up about a dollar from when I bought them on the morning of March 15th. With another dividend increase expected to be announced at their upcoming annual general meeting, and a potential renewal of their 3 year, average dividend increase of 10% plan as well, I’m really looking forward to watching my shares in Telus grow. Having slowed the loss of their wireline subscribers, and with their strong foothold in Western Canada, it’s one of the many Canadian companies I plan to hold for the long haul.

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