Has Telus Stock Bottomed Out?

Telecom giant Telus (TSX:T)(NYSE:TU) has been trading higher in recent weeks, after hitting a new 52-week low of $16.18 in mid-April. On Monday, it closed at $17.30. However, over the past five years, it has lost 36% of its value. The last time the stock had been trading around these levels was all the way back in 2013, calling into question just how much lower it might go.

As a result of the sell-off in recent years, its dividend yield has risen incredibly high, to around 9.7% right now. However, with investors growing concerned about its high payout ratio, there hasn't been a mad rush to buy shares of the troubled telecom stock.

Currently, the stock is trading at 29 times its trailing earnings, and that falls to a multiple of less than 19 when looking at its forward earnings. That is, however, arguably still a bit high for a company that isn't known for much growth. That's also why, despite its recent rally, I don't think the stock is out of the woods just yet, and its shares could still go lower this year.

The stock's dividend still looks safe for the time being, based on free cash flow, as the company generated $1.9 billion in free cash over the trailing 12 months compared with nearly $1.7 billion paid out in dividends. The payout may be appealing, but it may not be the safest option out there. If you're buying Telus stock, you should tread carefully because while it is cheap, it's still a risky option to be holding onto right now.

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