Q: Telus Payout is242%,Current ratio .70,Dept to Equity 1.83, ROE-2.26, ROA 1.63. Is this not grounds to sell as its dropping a lot?
5i Research Answer:
Telus just raised its dividend in November. When looking at payout ratio, we prefer to focus on cash flow. Earnings can contain lots of non-cash charges, but cash is what's needed to pay a dividend. 12-month operating cash flow was $5.08B, and dividends paid in the period were $1.5B, for a still-respectable low ratio. Debt is high, and growth is low, and the sector is struggling, certainly. But a bounce from depressed levels is certainly possible on any good news. With an 8% yield buyers may support it, especially with interest rates headed lower in Canada.