Wednesday, May 5, 2010

Telus Increases Dividend

One of my DRiP holdings, Telus Corp (Toronto: T and T.A), has announced yesterday that the company was increasing its quarterly dividend to $0.50 (up 5.3% from the previous $0.475).

This is a surprise, as the company had failed to increase its dividend in November. But a nice surprise it is. This brings the yield on non-voting shares (T.A) to 5.5%, which is quite high. There is still a lot of uncertainty in the telecom sector, as the impact of new entrants in the market is a big unknown.

I'm not the only one to have been pleasantly surprised by the move -- the shares have jumped 4% on the news this morning.


MG (moneygardener) said...

In my experience dividend increases rarely move shares. In this case the bump probably had more to do with the earnings beat.

Frog of Finance said...

I agree -- both the bump in the share price and the dividend increase have the same source: the increase in earnings.

But the dividend increase also signals something else. Previously, management felt cautious about the entry of new competition in the market, and was not comfortable increasing the dividend. The latest earnings seem to have convinced them that their previous stance was a bit too cautious, and that there was room for an increase.