Should You Buy Telus Stock for Its 4.8% Dividend Yield?

Telus Corporation (TSX:T)(NYSE:TU) is one of the safer dividend stocks that you can buy on the TSX. The telecom company’s coming off a strong second quarter where its sales rose 3.6% during the pandemic when many businesses were struggling and even shut down.

Its net income, however, was impacted by the COVID-19 pandemic as Telus’ bottom line declined by 39%. However, with a profit of $315 million, it was still a strong quarter for the company.

For dividend investors, one of the most important numbers is free cash flow – how much money the business has left over after its day-to-day operating expenses and its capital expenditures. Telus reported free cash flow of $511 million in Q2, which is a 58% improvement from the prior-year period.

That makes its dividend look in great shape because if Telus can grow its free cash flow during tough times, it’s proving to be a resilient investment to hold on to.

Currently, Telus pays a quarterly dividend of $0.29125. At a share price of around $24, that means if you buy Telus today you’re earning a dividend yield of about 4.8%. If you were to invest $25,000 into Telus you’d be earning approximately $1,200 a year in dividend income.

And the telecom giant typically increases its dividend payments over the years, so that recurring income’s also likely to grow over the years.

Year to date, shares of Telus are down a modest 4%, which is only slightly worse than the TSX, which has fallen by 3% thus far.