Telus is down but not out, this investor says

Newhaven Asset Management CEO and portfolio manager Ryan Bushell says Telus (Telus Stock Quote, Chart, News, Analysts, Financials TSX:T) looks washed out after its dividend cut, but the underlying business remains defensive.

Speaking on BNN Bloomberg’s Market Call on Sept. 10, Bushell said Telus has one of Canada’s main fibre-to-the-home networks and is closer to the end of its buildout, which should support cash flow.

The investor said Telus could also benefit from AI through cost reductions, though the turnaround will likely take time.

“This is not a one-year pick,” Bushell said. “I fully expect to come back a year from now and this might not be up.”

Still, he said the stock offers a roughly 5% dividend yield even after the cut, giving investors some income while waiting for a recovery.

Bushell compared Telus to past out-of-favour names such as Manulife, AltaGas and Enbridge, which later rallied after extended weak periods.

“All of these companies had tremendous runs out of those doldrums, because there’s an underlying business there that is going to survive and move forward, and we think Telus has that,” he said.

Bushell said Newhaven has owned Telus for a long time and is willing to add at current levels.

Of the analysts covering Telus, two rate it “Buy,” 12 rate it “Hold” and nine rate it “Sell,” with a consensus target of $17.18.

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