It’s a hard market to figure out, with little indication of where best to park your money and inflation still running rampant. Stocks are constantly yo-yo-ing, bonds are looking worse and don’t even get us started on bitcoin.
But when all else fails, high-dividend-paying utilities might be just the right fix for our troubled times. That’s the call from wealth manager Brianne Gardner of Velocity Investment Partners, who has nominated Canadian telecom giant stalwart Telus (Telus Stock Quote, Charts, News, Analysts, Financials TSX:T) as one of her best ideas for the next 12 months. Gardner says recessionary fears should have investors thinking of the solidity of a name like Telus right now.
“I still like Telus and we own it. We recently purchased some more of it on June 22. We bought around that $28 mark and it’s currently trading just below that,” Gardner said, speaking on BNN Bloomberg on Friday where she named Telus one of her three Top Picks for the year ahead.
“I like both Telus and BCE and I like the telecoms. I think they’re great businesses that will do well in a recessionary environment,” she said.
Telus is Canada’s number two telecom, with $4.373 billion in revenue for its latest quarter, the company’s second quarter 2022, and targeting eight to ten per cent growth for the full 2022 year. Telus is still growing its mobile and fixed customer counts, too, which rose by 247,000 and 24,000, respectively, in the second quarter.
Telus sets itself apart somewhat from Canada’s other telcos, however, in that while BCE and Rogers have media assets to complement their main telecom business, Telus has been focusing more on the technology side of the business, branching into big data, digital customer experience plus healthcare and agriculture-oriented technology applications.
Telus already has the country’ largest electronic medical records (EMR) business, while its TELUS Health segment just got a lot bigger through the acquisition of digital health provider LifeWorks in a $2.3 billion deal that closed earlier this month.
“As one of the largest health technology companies globally, our newly expanded TELUS Health organization will provide employers across the globe with world-leading digital health and wellness solutions for their employees that are convenient, innovative and highly effective,” said Telus CEO and President Darren Entwistle in a press release.
Telus shares ended up doing very well over the pandemic, with the stock rising 18 per cent over 2020 and 2021 and carrying that momentum into the first quarter of 2022. But it’s been mostly downhill more recently, with Telus topping out in April at just over $34 before sliding back to the $28 mark around which it’s currently trading.
Analysts are supportive of the stock, however, with Telus currently having 13 Buy ratings against four Holds and zero Sells and an average target price of $34.02, according to BNN Bloomberg data.
“This stock has a potential upside for investors of over 20 per cent with the price target on the street. So, stable earnings, good high dividend yield and fundamentally a strong business model,” Gardner said.
Currently, Telus’ dividend yield is at about 4.9 per cent, which compares to BCE at 6.27 per cent and Rogers Communications at 3.77 per cent.