Thursday, November 12, 2009

No Dividend Increase from Telus

Telus, one of the companies that I own in my DRiP portfolio, has announced last week that its next dividend will be unchanged at $0.475 per share. This means no change to the dividend, whereas this is usually the time when the company announces the annual increase in dividend.

The announcement was part of the third quarter results (full text here). Revenues were sligthly lower, a reflection of the country's weak economic growth. Meanwhile, the company is continuing with its capital expenditures program to complete its next generation wireless network (which will be completed in 2010) and continue its wireless broadband expansion. Personally, I also get the feeling that the company is bracing for the entrance of new competition in Canada be being cautious.

The lack of a dividend increase is a bit of a disappointment. However, the company also announced an amendment to the reinvestment plan to introduce a 3% discount on shares purchased by reinvested dividends. As a result of this, I am effectively getting a 3% increase in my dividend even though the nominal dividend remains the same.

7 comments:

Steve said...

I think this is the best outlook to have for this. 3% is better than nothing. What is the 5 year return on Telus (I bought some Rogers but it would be good to diversify).

Steve Zussino said...

Does Telus always increase its dividend? I thought it only did this the last few years.

Frog of Finance said...

Telus has been increasing its dividend in the last couple of years, after reducing it in 2002 (if I remember correctly). The dividend has now exceeded what it was before the cut.

The 5-year return on Telus would be about 65%, if you include the dividends paid over that period (over $5.50 per share in 5 years). And that's considering the beating the shares have received over the last year.

MoneyEnergy said...

Thanks for the heads up about the Telus dividend and discount. I've got Telus as well, it will be great to get that discount. Would probably still have preferred a dividend increase, though. But this way they are encouraging capital to stay with the company. Perhaps as a cautionary measure for times ahead.

Doctor Stock said...

I suspect with the increase in competition ahead, Telus will not be a good investment and the dividend may be revised in the next 18 months.

Frog of Finance said...

I think that the fears regarding competition are a little bit overblown. Companies can and do adapt to competition. Might even be good for them.

But I certainly prefer a company that takes the threat seriously and prepare for it, than one that would scoff at it and up taken by surprise.

Anonymous said...

It is possible to tell, this exception :)