Canada is a gold mine of dividends. It has some of the most lucrative dividend stocks offering more than a 6% yield, growing dividends per share consistently. The reason for this is its immigration policies and strong exports to the United States. Bank, energy, and real estate stocks have been the dividend kings with decades of dividend growth. However, telecom is one sector that has been a lucrative dividend investment. Among the telcos, Telus Corporation (TSX:T) is at a sweet spot. Here’s why.
Why is Telus the telco stock to buy
Balance sheet leverage
The Canadian telecom sector has seen a shift in market share since Rogers Communications acquired Shaw Communications. Quebecor saw a significant uptick in share price after it acquired a small portion of Shaw’s business, which Rogers liquidated. This consolidation drove their balance sheet leverage.
Meanwhile, BCE and Telus have been investing heavily in the 5G infrastructure, which required significant capital expenditure and drove their debt. Among the industry players, Telus and Cogeco Communications have the lowest debt-to-equity ratio. A lower leverage gives financial flexibility at times of economic uncertainty.
Telus gets a brownie point here.
Between Telus and Cogeco, the former is a bigger player, with advanced telecom infrastructure and bundled offerings. Moreover, Telus has a bigger market share than Cogeco, which gives it an edge in uncertain times.
Regulatory change
The telecom regulator’s rule change forcing giants like Telus and BCE to open their networks to competitors puts them at a disadvantage. Smaller players like Quebecor and Cogeco are the key beneficiaries of the rule. This explains why BCE and Telus stocks moved in opposite directions from Quebecor and Cogeco stocks. However, the two giants are sharing lower network speeds while keeping the most advanced speeds. This creates a quality difference between their offerings.
Telus is embracing this change and offering its bundled solutions on its competitors’ networks. This has helped it increase revenue. However, the price war with BCE reduced its average revenue per user (ARPU). Meanwhile, BCE saw its revenue fall while its subscriber counts increased. The revenue dip came as the company is selling its non-core businesses, which could lead to more revenue dips in 2025.
Telus and Cogeco win on the debt front, and the two, along with Quebecor, win on the regulatory change as well. This makes Telus the go-to telecom stock.
But is Telus stock a buy for its dividend yield?
On the dividend front, I compared the telecom stocks based on the dividend reinvestment plan (DRIP) offering, dividend yield, and dividend growth rate.
| DRIP Offering | Telecom Stocks | Dividend Yield | Dividend Growth | Share Price as on April 16 2025 | 52-week Range |
| DRIP | Telus | 7.87% | 7% | $20.52 | $19.10–$23.43 |
| DRIP | BCE | 13.45% | 0% | $30.14 | $28.73–$49.13 |
| DRIP | Rogers | 5.74% | 0% | $35.13 | $32.42–$56.55 |
| No DRIP | Cogeco | 5.65% | 8% | $65.15 | $50.82–$75.09 |
| No DRIP | Quebecor | 3.95% | 6.10% | $36.59 | $28.38–$38.50 |
BCE poses strong competition to Telus. However, BCE’s 125% dividend payout ratio and temporary dividend pause make it riskier than Telus, which has an 81% payout ratio.
Telus is a safer dividend stock as it offers a good blend of high yield, high growth, and the option to compound your returns at a nine-year low stock price. What does it mean? If you invest $2,000 in Telus, you not only get an annual dividend of $156, but you can also buy more shares of Telus with this dividend as the stock trades near its nine-year low. The $156 dividend can buy 7.8 shares of Telus at $20 a share, compared to 6.7 shares at $23 a share.
