Wednesday, February 18, 2015

Telus, TU next 2015 Dividend Machine

In this blog I write about implementing my three spigot strategy for creating income.  One strategy is to buy discount bonds but there have few bonds that pass muster.   Therefore, I most often write about dividend stocks.   

 I don’t recall ever writing about selling a stock.   I write about stocks that I have analyzed and find them to be Dividend Machines or dividend paying stocks that have the additional capacity to produce income through selling covered calls.

Today, I am writing about Telus, Corp., symbol TU.   Telus is a Canadian telecom company.  TU and BCE have a lot of the market in Canada.  TU has been a particularly good income stock.

TU Dividends

Telus pays dividends quarterly.   There is a variation due to the difference between the Canadian dollar and the U.S. dollar.   However, if you look at their dividends over time, you will find an impressive history.

Beginning in 2001, TU has raised the dividend every year.   And the raises have been substantial as you will see below.

Telus will pay a quarterly dividend of $.3204 on April 1, 2015 to stock holders of record on March 9, 2015.  Four quarters of this dividend would equal $1.2816 for a forward yield of 3.645%.  However, the dividend varies through the year.   Last four quarters of dividends equaled $1.4354 for a trailing yield of 4.08%. 

TU as a 2011 Dividend Machine  2011 Dividend Machine Model Portfolio

As you know, once I find a stock that meets all four of my Dividend Machine criteria, I include that stock in the current year’s Dividend Machine Model Portfolio.   I named TU as a 2011 Dividend Machine on August 22, 2011.  At that time, I added 100 shares with a basis of $49.46.  Dividends were $2.24 per share for a yield of 4.528%.  

Telus has been in the 2011 Dividend Machine Model Portfolio for 42 months.  The stock split so that the portfolio now holds 220 shares.    The dividend has increased an average of 7.35% per year every year.  Moreover, TU has rung in some serious capital gains.   Today TU trades at about $35.16.   Money invested TU when it was named a Dividend Machine would have increased from $4,946 to $7,735 today for a gain of 56.389%.   

TU as newest 2015 Dividend Machine

Telus, qualifies again as a Dividend Machine and I will add it to the 2015 Dividend Machine Model Portfolio today.    Earnings are $2.03 with trailing dividends of $1.4354.  Forward yield is 3.654%.   Dividend increases have been well above my required minimum of 4% per year and D/E/ ratio is well within reason at 1.13.

The Table below presents TU’s Dividend Machine fundamentals.

Consider Telus, symbol TU, for the income producing portion of your portfolio.


Disclosure: Long TU