Investing in blue-chip dividend shares that generate regular money flows permits you to start a low-cost passive-income stream. One such TSX dividend inventory is Telus (TSX:T), which affords you a ahead yield of greater than 8%, given its annual payout of $1.66 per share in 2025.
Telus is a Canadian telecommunications and expertise firm working by way of two segments. Its Expertise Options section offers cell and web providers, cloud options, healthcare expertise, and good provide chain programs. The Digitally-Led Buyer Experiences section delivers AI-powered digital transformation and buyer expertise options.
Primarily based in Vancouver, Telus serves prospects throughout Canada with built-in telecommunications and IT providers. Within the final decade, Telus inventory has returned 64% to shareholders even after adjusting for dividend reinvestments. Comparatively, the TSX index has greater than tripled investor returns since November 2015.
Telus soared to an all-time excessive in early 2022 and is down over 40% from report ranges, rising its dividend yield to over 8%. Let’s see if Telus inventory is an efficient purchase proper now.
Can Telus inventory get well over the subsequent 12 months?
Telus reported strong third-quarter outcomes, showcasing the energy of its diversified telecommunications and expertise enterprise mannequin. The telecom big added 288,000 complete cell and stuck prospects, marking the very best efficiency within the {industry}.
Whole buyer connections reached practically 21 million, representing a 5% year-over-year enhance. The corporate’s postpaid cell phone churn remained industry-leading at 0.91%, the twelfth consecutive 12 months under the 1% threshold, a transparent aggressive benefit that drives greater buyer lifetime worth.
The Expertise Options section delivered 3% EBITDA (earnings earlier than curiosity, tax, depreciation, and amortization) development regardless of ongoing stress on cell common income per consumer, which declined 2.8% however confirmed sequential enchancment.
Telus reported web additions of 40,000 in Q3, pushed by the growth of its PureFibre community. Administration emphasised that it plans to bundle a number of providers to enhance general buyer economics and offset ARPU (common income per consumer) headwinds.
Telus Well being continued its sturdy development trajectory with income and adjusted EBITDA climbing 18% and 24% respectively. The LifeWorks integration has generated $417 million in mixed annualized synergies, practically triple the unique $150 million goal set on the time of the acquisition’s closing in September 2022. Current acquisitions, similar to Office Choices, are additionally enhancing operational margins by way of platform integration.
The completion of the TELUS Digital privatization marks a big strategic milestone. Administration expects this deal to generate $150 million to $200 million in annualized money synergies. The combination eliminates public firm prices and leverages the telecom chief’s stronger credit score profile to cut back borrowing bills.
Mixed with natural initiatives, the corporate’s AI-enabled income is projected to achieve roughly $800 million by 2025 and is anticipated to surpass $2 billion by 2028, representing over 30% annual development.
Telus strengthened its stability sheet by way of the Terrion tower partnership with La Caisse, which closed in September and already operates 3,000 wi-fi websites. The leverage ratio improved to three.5 occasions, down 20 foundation factors sequentially, and it stays on observe to achieve its 3.0 occasions goal by 2027.
Free money move elevated 8% to $611 million, supported by EBITDA development and decrease capital expenditures.
Is Telus inventory undervalued?
Analysts monitoring Telus inventory forecast adjusted earnings per share to broaden from $0.98 in 2025 to $1.39 per share in 2029. On this interval, free money move (FCF) is projected to enhance from $2.10 billion to $3.34 billion.
At present, Telus inventory trades at a ahead FCF a number of of 12.9 occasions, which is under its 10-year common of 21.3 occasions. At its present a number of, the TSX tech inventory may acquire over 30% throughout the subsequent three years. If we alter for dividends, cumulative returns shall be nearer to 60%.
A rising FCF base ought to translate to constant dividend hikes. Telus has raised its annual dividend from $0.84 per share in 2015 to $1.56 per share in 2024. Analysts forecast the annual payout to rise to $2.18 per share in 2029.
