Q: An analyst suggested there is a 50% chance Telus dividend will be cut by at least 30%.
What is your forecast with respective to Telus' dividend?
Is the stock now a sell buy or hold ?
Thanks
What is your forecast with respective to Telus' dividend?
Is the stock now a sell buy or hold ?
Thanks
5i Research Answer:
A month ago we might have been less worried, but T has a new CEO (as of June) and it may be an easier call for him to "blame" the prior CEO, take the tough medicine and cut the dividend to reset things under his leadership. He certainly likely would prefer a cut earlier than in a year or so after under his guidance. So, this is more of an "ego" call than a fundamental call. Financially, T could probably keep the dividend as is for a longer period. Still, we would be OK slowly buying. The dividend risk is embedded in the valuation of the stock, and some investors might be relieved to get rid of such uncertainty on the dividend. A 30% cut would still be a fairly attractive yield vs competing income products.