Then and Now – Telus
Welcome to another Then and Now post, a continuation of my series where I revisit some older blogposts and either rip them to shreds (because my thinking has totally changed on such subjects) or I’ll confirm my position on various personal finance topics or specific stock and ETF investments.
Today’s post is about a dividend favourite with many DIY investors in Canada: Telus (T).
You can read about my previous Then and Now posts on certain stocks (good and bad!) at the end of this post.
Then and Now – Telus
Gosh, I started writing and hinted about owning Telus stock almost 13 years ago on this site.
Passionate readers and subscribers of this site will know, I’m a HUGE fan of not just dividend paying stocks but rather dividend growth stocks – companies that tend to increase their dividend payments to shareholders year-after-year. Telus has been historically one of those companies.
- Back in 2010, while I shared that BCE stock was going to be where I would put most of my investment money that year into that company I did share that Telus was a good long-term company I would consider owning. Even way back then, I considered buying and owning some Canadian dividend stock selections were somewhat easy.
- Like BCE, I was specifically interested in owning Telus since they made some (and continue to make?!) some serious money year-after-year. So, based on the historical juicy dividends delivered by this company, along with capital gains, I believed after buying a good chunk of BCE that Telus would also be a great long-term holding.
- With the Tax Free Savings Account (TFSA) still quite new to many investors, I knew tax-free, growing dividend income would make great sense for this account – owning Canadian dividend growth stocks inside this account.
- If and when my TFSA was full and out of contribution room, at some point, I also knew that owning Canadian stocks are a solid, tax-efficient way to invest thanks to the Canadian Dividend Tax Credit.
- So, at the start of 2011, I managed to buy some Telus shares for my/our portfolio. I haven’t looked back since…
- Since starting my position in Telus, I’ve purchased hundreds of more shares over the years. I/we own these shares in various investment accounts: TFSA, RRSP and taxable.
- I bought and continue to own Telus because it remains a core telco holding of most Canadian Exchange Traded Funds (ETFs) and big bank equity mutual funds. I figure if they own hundreds of thousands or millions or shares then maybe I should continue to own some too!!
Then and Now – Telus Summary
Telus is off to a roaring start in 2023 – up about 8% YTD at the time of this post.
In the coming weeks, investors can expect to see the final batch of Telus’s earnings in early February, potentially with a small dividend raise as well as I anticipate more free cash flow will occur again…and over time.
Over my investing term with Telus, returns have been juicy but by no means are dividends let alone capital gains guaranteed.
Source: Portfolio Visualizer
That said, I only see the need for Telus and/or acquisitions by Telus accelerating more with time.
My collection of stocks (even the odd one that cuts dividends! – that’s you Algonquin Power (AQN)) continues to reward me as a shareholder via growing dividends and capital gains.
Dividend investing has and remains a major part of semi-retirement plan.
You can read more about my wealth-building path using dividend paying stocks here:
I’ll keep you posted on more holdings and changes as they happen, good, bad or in between!
Thanks for reading and a reminder about my previous Then and Now posts below.
I keep most of my holdings on this page here.
Previous Then and Now posts and stock ownership:
Check out my 2022 update with Waste Connections.
I’ve owned Canadian National Railway since 2016.
I started to own Canadian Apartment REIT in 2013 – and still own it.
How long I’ve owned Royal Bank and why.
My 10-year+ ownership in Procter & Gamble.
Why I own CIBC 11+ years later.
My bond-like income from owning Fortis.
Johnson & Johnson – my longest running U.S. stock in my portfolio.
Bell Canada (BCE) is my dependable telco dividend payer before Telus!
Bank of Montreal has been a dependable dividend grower with capital gains.
Check out Bank of Nova Scotia ownership here.
H&R REIT – and why I no longer own it actually!
Hi Mark: I was patient and lucky Mark. FTS split 4-1, BAM has split five times, CU has split at least 4 times, T has split twice, BCE has bought out other companies which supplied me with more share, i.e. Bell Aliant and Manitoba Telecom, ENB has split 3 times and I also received 551 shares when Enbridge Income Trust Holdings was privatized. TD and NA have also split.
I’ve participated in a few stock splits over the years. ENB helped me out and I was a participant in the recent CM split too.
Hi Mark: @ Ricardo your point of paying yourself first is spot on, but my TELUS shares were bought originally at prices between$13.125 and $16.75. They were then marked up in price in ’94 when the government said you could declare your $100,000.00 of capital gain and still keep the stock which I did. the revamped price on 950 shares was $25.25 and $14.30 on 50. As you can see the original cost was low. The shares also split twice so my 1000 shares at home turned into 4000. BCE was adjusted to reflect the partial spin off into Bell Aliant Regional Income Trust. A plan was in place for it to be taken over and privatized by the OTPP and a hedge fund so I moved my shares to Web Broker. The plan didn’t go through as the auditors for the company nixed it. As for ENB I think it is a great company and have recommended it to my nephews but personally I can’t buy anymore as I already have 21000 shares. Split shares look tempting but maybe to tempting. As far as dry powder goes I have a lot of it and my brother thinks its crazy having that much cash sitting in an account not collecting any interest but if a buy comes along I have the cash. I don’t have to worry about the RRIF as there is enough cash for the government or bank to with draw and it will add up again. I always put the max amount in the TFSA at the start of the year and this to has built up so this year I will put the cash there to work.
Those are an incredible amount of shares, Ronald. Wow. Amazing work.
I’m happy to have 1,000+ shares each of BCE, Telus and ENB…hopefully they will all grow more 🙂
Stay in touch!
Hi Mark: Jim I think you are right on the money. Darren has tried to leave before and they brought in Joe Natale to be the CEO, but he turned out to be an absent CEO as he wanted to stay in Toronto. This didn’t sit well with TELUS and so he was let go and Darren came back. Maybe he likes the hands on of being a CEO or like most people finds it hard to leave, but he will eventually and the company should be working on a succession plan for when that day arrives. TELUS is a more diverse company now than when it was just a telephone company with TIXT, health and agriculture to go along with communications and media. IE , television via fiber optic cables.
Yes, Telus does seem to be expanding and Darren as CEO has done a great job in growing their brand.
Hi Mark: Like I have said before I enjoy the stories and the story of TELUS is interesting. They were looking for a new CEO and picked Darren Entwisle from Cable and Wireless PLC. He had previously worked for BCE. The old CEO, president and chairman Brian Canfield had worked for B.C.Telephone for 50 years and he saw through the transition to TELUS. Ricardo just thinking if most DIY investors have shares in ENB, TRP, PPL, and BIPC and EMA, FTS, CU and TA why not have multiple communication companies also. I’ve got BCE and TELUS but something about Rogers rubs me the wrong way. I have a story about those two companies. When I was with a full service broker he phoned up one day and said that we are selling all our BCE and buying B.C. Telephone. Dad said OH! and he said that’s what we’re doing so dad hung up. three months later the broker phoned up and said that we’re selling all our B.C. Telephone and buying BCE. Naturally in both cases we did nothing as dad couldn’t see the sense in selling one telephone company to buy another. This is what they call churn in the industry.
Yes, many DIY investors in Canada own those, rightly so:
-pipes = ENB, TRP, PPL, and infrastructure in BIPC and,
-utilities = EMA, FTS, CU and TA but BCE and Telus are very utility-like too!
I find Rogers is mis-managed a bit but that’s just me a bit…as a customer, they were a mess to deal with.
A lot depends on how much dry powder you have.
Obviously BCE is more expensive to purchase a hundred shares than T is. Not that you need a hundred shares though. It is just if you have the where-with-all to do it, it seems BCE is better for the simple reason that it pays more. And for the time I have followed/owned it has consistently done so.
One of my objectives is to at least purchase enough shares to pay the buy/sell costs (in and out) with the first dividend. After that it is either a profit or a loss on pricing.
While I do own multiple oil stocks I still like to look at the div % as to who will pay me more.
My latest purchase is ENS – a split stock that holds only ENB. I also own ENB on its own. Bought a few to try them out.
You have to be careful where you hold ENS as it has a return of capital so it is better suited to registered accounts. And it is a MOPAY from what I see so you can reinvest those dividends sooner Also more volatile and has been known to reduce the payout although not recently Again my thinking is that if you are happy with ENB then ENS might be a consideration as it holds only ENB
Not advising it, just pointing out some of my reasoning to dip my toes in to it. 250 shares will pay my in/out costs and then we will see how it performs price wise. If ENB goes up then ENS will follow.
A little addendum to my above reply.
As I am retired now and pulling the mandatory percentage (not 4%) from my RIF & LIF I also tend to favour the higher paying stocks. At present T is below my mandatory withdrawal rate while BCE is above it. So by having BCE I could increase my portfolio value ( less withdrawal than dividends) whereas T would, at 4.92% today, necessitate a stock sell to meet the withdrawal rate.
Eventually I’ll reach a tipping point where it is near impossible to keep up with the mandatory rate, increasing every year, unless your magic ball shows you where to make really big capital gains every year. Won’t count on that.
Great stuff. When do you think the tipping point might be? Our plan has us likely turning on RRSP to RRIF at age 65 (although likely to withdraw from RRSP sooner in my 50s and 60s a bit as needed while we work part time) and essentially “live off dividends” in our 50s and 60s, likely around 3.5% to 4.5% yield.
I can’t resist Mark – IT DEPENDS LOL
Obviously any number of factors in here. If there is a big capital appreciation in the year, stock value increase, then more will have to be drawn out of the RIF/LIF. If the divs have not appreciated to cover that, doubtful, then you are in a shortfall situation which necessitates an equity sell. At present I am able to grow my holdings as both my RIF/LIF are in excess of the minimum withdrawal rate. A two sided sword as obviously any capital appreciation means an increase in the min withdrawal.
Tipping point? Probably someplace between 75 and 80. Hard to say. How much will they increase the tax bracket?? This affects how much tax we pay and therefore we can either spend it or re-invest it in a non registered account as I am doing which in turn may increase my tax bracket and OAS clawback. Two edged sword – the more you make the more you pay. Luckily the min withdrawal rates do not increase significantly in the early years
In reference to my above bias towards higher paying dividend stocks and BCE vs T, I did a little cyphering this morning. Check out if my figures are good Mark I presume 4 quarterly payments
Values as of Jan 28: BCE $62.32 Div (X4) $0.92 = $3.68 yr
T $28.40 DIV(X4) $0.351 = $1.41 yr
Now lets assume I want $ 20,000 in divs per year to supplement whatever other monies I am receiving to live the life I want. So according to my cyphering I would need 5,435 of BCE to get $20K of Divs. T (Telus) would need 14,275 shares (this really surprised me) to get the $20K of divs
So the cost to purchase T for the above div payout is $405,410.00 APPROX
BCE for the above shares $338,704.00 APPROX
This is just for illustration as not too many people would be able to purchase that quantity of shares but it illustrates that the “more” expensive stock can actually be less expensive.
As to which one will have better capital appreciation only time will tell.
P.S. I did make my dividend projection for 2022 Mark. Was thinking near the end I might come up short.
You’re in oustanding shape then:
“At present I am able to grow my holdings as both my RIF/LIF are in excess of the minimum withdrawal rate. A two sided sword as obviously any capital appreciation means an increase in the min withdrawal.”
Ever. Growing. Income.
Sure, income is a double-edged sword but I’ve always considered paying my share of taxes means I’ve/we’ve done well in life.
I’m sure you feel the same?
As my uncle said many years ago, if your paying taxes its because your making money.
So which is less expensive Mark BCE or T?
Just in case my cyphering was off.
Well, if you use higher yield as a simple screen then likely BCE is a better deal now this month vs. Telus. I like both and since I intend to remain a long-term shareholder of both I simply buy when I have the money to do so.
Different optics Mark. I’m retired so I am looking for divs and not capital gain. Not that I would buy a stock that I thought was on the high side.
Haven’t bought T because of the div differential and BCE comes on sale every now and then. Missed the one last Oct. Not enough powder then as it was near the end of the year and I had to take out my minimum withdrawal and I like to keep some cash (next year’s cash wedge) in there – just in case.
Ha, well, when you have enough to avoid and/or not worry about capital gains, you’re in a good financial place. I hope I can join you eventually 🙂
Smart on the cash wedge. I hope to have my 1-years’ worth saved up later this 2023 which will a) help me sleep at night and b) enable some dry powder to be put to work if/when needed!
As in other Canadian sectors, communications has been a bumpy ride in our portfolio.
We didn’t own it at the time, but just a reminder that back in 2001 Telus cut it’s dividend to 15 cents from 35 cents.
Management can make any excuse it wants for the cut, but that doesn’t help the faithful, long term shareholder who’s seen their income from this entity sliced by more than half. It can take many years of dividend increases to regain the cash you’ve originally lost.
Telus we first bought in 2008. A year later we had our first purchase of BCE and so far, quite content with both.
In 2004 we first bought Manitoba Telecom Services Inc. Then in 2005 it was Aliant Inc. and finally Astral Media in 2008. All three were planned long term holds, but were eventually bought out by BCE. We probably sold before the buyouts for various reasons, and of course anything profitable for us in the non-registered portfolio gets taxed.
Rogers and Shaw Communications were first bought in 2009. Another couple of long term duds we’d been better off not owning. Sold Shaw in 2019 and Rogers in 2021 and both for the same reason. They stopped increasing their dividends for shareholders over the past few years. More interested in hugging each other, and to heck with the shareholders.
As always in dividend investing, I can always see what happened in the rear view mirror, but looking ahead to the future, not so clear.
Two relative newcomers to the portfolio added to our communications sector are Cogeco and Quebecor. Just an experiment to see how far these two companies can take us.
Hi DividendsOn, I think the thing to remember about 2001 is what was happening then. T had just acquired Clearnet in a larger takeover and debt load was too high. So the div cut was needed to deal w overpaying. Thankfully T is doing no major acquisitions so I don’t see a cut in this name. I believe Darren has capital discipline. The concern may be as to who takes over when Darren retires.
Yes, interesting…do you think that deal will eventually go through re: Rogers? Seems better positioned now.
My crystal ball is always a bit cloudy too!
Hi Mark: I don’t think you will see a dividend increase in February but probably the latter half of May. Before the pandemic Telus would raise its dividend for the first of Jan. and then for the first of July. Mark the story of Telus Corp. It started out as B.C. Telephone and was 50% controlled by GTE Communications in the states as was Quebec Telephone. I had both. GTE let B.C. Telephone go as well as Quebec Telephone. B.C. Telephone changed its name to B.C. Telecom and then the next thing they did was to buy out or take over Quebec Telephone. After that they merged with Telus of Alberta, but this wasn’t any ordinary merger as 80% of the board of directors came from B.C. Telecom as well as the Chairman. After this they changed the name again to B.C.T . Telus. After this they finally dropped the B.C.T. and kept the Telus name. They then bought Clearnet Communications and with that brought George Cope aboard. After a few years he got the offer to be the CEO of BCE and he took it. It has split twice since I have had it so I have 4000 at home and I had 1330 in Waterhouse and 2660 after the last split. It was around $20.00 so I thought it was a good chance to even up so I bought 1340 shares to give me 4000 in Waterhouse so now I have 4000 in Waterhouse and 4000 at home. As far as BCE goes I have had it for years. I also had the four Atlantic telco’s. When they merged to form Aliant Inc. I had over 18000 shares but my dad said that was to much and I should sell some so I sold half. Now I had 9387 shares and when it was taken over by BCE I received 5960 shares which brought my total to 9620. In ’20 I thought this was another opportunity to even up so I bought 80 shares which brings me to my total of 9700 shares. A lot of shares in TELUS and BCE were purchased when prices were low so the difference in % is immaterial. Wait for May Mark to see a dividend increase for the 1 July/ 2023.
Ronald, I agree re timing of next increase. Mark, you might be a little optimistic on early dividend increase? We shouldn’t see one till they report Q1 results, not current Q4 results.
I think their Q4 results come out in Feb. each year, which means they may announce a hike in Feb (??) or not (ha) and then the increase takes effect for shareholders in May but we’ll see!?
I am probably being a bit optimistic. LOL
You’re probably right (May vs. Feb) but we’ll see and you’re likely right since even if they announce next month (Feb.) it won’t take affect until another quarter.
Those are a LOT of Telus or BCE shares 🙂 Well done.
I own some shares. It seems like Telus is getting to be more diversified with its company initiatives in telemedicine, EMR spaces etc. I bought shares in Telus in my TFSA to balance out my telco investments as I also own BCE in quite a few accounts including an RESP.
The current plan is to buy more of Telus over time. Granted I don’t eat my own cooking because I don’t have any devices/contracts with Telus so the only way I support the company is via being a share holder LOL
Yes, I do like Telus expanding – gosh, healthcare needs some of these services and solutions for sure.
I will probably continue to buy some Telus over time, just want to make sure it doesn’t dominate my portfolio too much.
All my best, Sue!
No doubt that Telus is an excellent company.
I just don’t get why one would not buy BCE in place of T simply for the extra 1% of divs per year.
Everyone is always talking about dividend compounding. Well here is an excellent case to own a higher paying company over a decade or two and reap the rewards of a higher (slightly) paying company.
Told Mike (DSR) that over a good St. Hub chicken several years ago.
I have held BCE in varying amounts since at least 2010 so 12 years of one % compounding.
The price differential between T and BCE has been fairly static throughout that time period as well even with the T split
So I’d rather get 5.95% of a $62 company than 4.93% of a $28.60 company
Never know, things may change.
Probably own around 4000 BCE at present. Have sold in the past at a high and repurchased on a low.
Nice, Ricardo = 4,000 shares in BCE is not at easy feat! 🙂
It will be interesting to see how BCE and/or Telus do going forward…the financial future is always very cloudy.
Nothing like some good St. Hub chicken! Ha.
I missed these posts Mark , Thank you! My whole family got shares of Telus 🙂 me the wife and the kids on top of being an excellent company I think it’s becoming clearer every year how people from all ages are addicted to the internet and of course their cell phones 🙂 about thirty years ago I’ll be driving by a bus stop only to find people sitting on the bench and reading books and newspapers but today I can’t recall the last time I saw someone reading a paper form of news 🙂 add to that the massive immigration policy and we can picture the massive yearly increase in new customers …it’s all good news for us as investors I guess.
Ha. The whole family. Love it. I suspect most if not all dedicated DIY stocks investors in Canada either own Telus and/or are looking to buy Telus for their portfolio. Many own it indirectly of course via low-cost ETFs.