Telus is a better buy than BCE, this portfolio manager says

Telecom provider Telus Corp (Telus Stock Quote, Chart TSX:T) has a number of pluses going for it, not the least of which is its strong C-suite and alluring dividend, says Stephen Takacsy, president and CEO of Lester Asset Management, who says the company compares well with competitor BCE.

“Telus we like even more [then BCE] because it’s a pure play and it has one of the best CEOs in Canada in Darren Entwistle,” says Takacsy to BNN Bloomberg. “We own Telus as well as [BCE] but we have a bigger position in Telus. They’ve gone the pure play route and haven’t diversified into media.”

After a disappointing first half of 2018, Telus shares hit an all-time high in mid-August of $49.15, only to pull back in the weeks since. The stock is now even for the year, but that’s after losing seven per cent of its value over the first four months, as investors began vacating the telcos in response to rising interest rates.

Telus’ last earnings report in early August surprised with its wireless subscriber adds, although profit was flat with $390 million of net income, a 0.3 per cent year-over-year increase. CEO Entwistle stressed his company’s wireless customer loyalty and lifetime revenue, saying, “The second quarter was characterized by the best combined retention levels on record in respect of postpaid wireless, high-speed Internet and TV. This contributed to the strong customer growth, alongside continued value-creating financial results, driven by our team’s relentless focus on providing the best customer experience, buttressed by the ongoing generational investments we are making in our leading broadband networks.”

Takacsy makes note of Telus Health, the company’s foray into benefits and claims management. “Telus does have some other interesting high-growth components like health care, which is still a tiny part of their business but they’re growing quite aggressively,” he says. “So you get a little health care thrown in with the wireless, internet and broadband growth.”

“They’re past their peak capital expenditure so you’re going to see their dividend continue to grow quite nicely for many, many years to come,” he said.