Telus Raises Dividend 10% & Extends Dividend Growth Plan
On May 5th, Telus (T.TO) announced an increase of their quarterly dividend from $0.44 CAD to $0.46 CAD payable on July 4th, 2016 (Q2 2016). This represents a 4% dividend increase from their latest quarterly dividend payment of $0.44 CAD and 9.52% from their dividend payment of $0.42 CAD of Q2 2015, a year ago.
Considering the Dividend Beginner’s portfolio consists of 100 shares of Telus, this $0.02 increase in quarterly payment adds up to an increase of $8.00 in annual dividend income, or $0.67 per month. My 12-month forward dividend income has increased from $1809.24 to $1817.24 ($150.77 to $151.44 monthly), an increase of 0.44%.
Telus now accounts for $186.00 of my annual dividend income, which equates to 10.13% of my total income. I would like to reduce this exposure to 5% or lower through the addition of new stock purchases and capital allocations, but this is not an issue with the current size of my portfolio and dividend income.
While $8.00 in annual income does not sound incredible, it would require an investment of $182 in Telus at their current 4.4% dividend to receive that kind of income. It’s as if Telus reinvested $182 of their own capital for me!
|Before raise||Net Increase||After raise|
|Annual Dividend Income||$1809.24||$8.00||$1817.24|
|Monthly Dividend Income||$150.77||$0.67||$151.44|
In addition to this wonderful dividend increase, Telus has gone even further and announced they will be extending their dividend growth plan from 2017 through 2019! They plan to increase dividends semi-annually, ranging from 7% to 10% increases yearly. Telus’ payout ratio guideline sits between 65% and 75% of net earnings. Currently Telus is paying out 76% of earnings but are reinvesting heavily in infrastructure. Telus is expecting increased earnings in the future, and given their track history of dividend increases, should be safe.