Telus is a solid stock to own in 2019, this fund manager says

Like its fellow Canadian telcos and the markets in general, the start of 2019 has been good to Telus Corp (Telus Stock Quote, Chart TSX:T).

The stock is now up 5.5 per cent year-to-date while its dividend currently clocks in at a handy 4.5 per cent. Together that makes Telus a great long-term hold, says Douglas Kee of Leon Frazer & Associates.

“We own Telus and have owned it for quite a while. A good dividend grower, call it about six or seven per cent a year,” says Kee to BNN Bloomberg on Wednesday. “The whole industry is challenged by competition. Revenue growth is about two to four per cent a year now and that’s all coming from the wireless side.”

While competitors like BCE Inc. may have diversification through its media division, Telus’ health care records and data management business is a nice play for the company, Kee says.

“The data side of the business, Telus has actually been expanding. It’s kind of a hidden gem that they have. It’s not huge in the business but it is attractive,” he says.

On February 14, Telus released its fourth quarter and year end financials, coming in with revenue of $3.76 billion, a 6.2 per cent year-over-year increase and better than the expected $3.69 billion, to go along with Adjusted EBITDA of $1.31 billion.

Meanwhile, management was targeting revenue growth of up to five per cent for 2019 and EBITDA growth of up to six per cent.

“Telus delivered strong fourth quarter operational and financial results, concluding another year of robust customer growth, while achieving our annual revenue and EBITDA growth targets for the eighth consecutive year,” stated CEO Darren Entwistle.

Looking at the quarterly results, analyst Rob Goff of Echelon Wealth Partners said that he remains bullish on long-term results from Telus’ wireless division while seeing growth at the wired end as well.

“Our outlook on wired finds building support in strong subscriber results, further fibre deployment and declining capex intensity. As 5G should recalibrate wireless, fibre should recalibrate wired about the connected home upselling potential,” wrote Goff in a client update on February 15. “We are encouraged by the wired potential and in particular with the improved market discipline in the West.”