TFSA: Invest $10,000 in Telus Stock and Create $2,270 in Annual Passive Income

Telus stock can give you annual passive income that can beat inflation. However, you can also compound your income through reinvestment.

With inflation rising faster than income, active income is not sufficient to meet expenses or an unexpected expense reduces your savings. And with the tariff war intensifying, the 2022 inflation of 7-8% could be a possibility. Canadians have just started to adjust to the increased prices of 2022, and now there is another probability of rising prices. This has highlighted the need to build passive income.

An investor uses a tablet

Source: Getty Images

Why investing at a dip makes sense

The Canada Revenue Agency (CRA) introduced the Tax-Free Savings Account (TFSA) during the 2009 Great Financial Crisis to encourage savings and investments. The current economic scenario is reiterating the importance of TFSA and savings. A market downturn is an apt time to invest. Those who invested $10,000 in Telus‘s (TSX: T) dividend-reinvestment plan (DRIP) in 2010 started with just $571 in 2010 and now earn $3,650 in annual passive income. A major reason for such high growth is they invested in the dip.

YearDividendTelus Stock PriceNew Shares AddedTotal Share CountTotal Dividend Amount
2025$1.61$26.00 124.56 2,240.66$3,605.68
2024$1.53$23.58 120.95 2,116.11$3,238.49
2023$1.43$26.13 96.77 1,995.16$2,851.88
2022$1.33$29.79 76.73 1,898.39$2,528.66
2021$1.25$25.21 80.46 1,821.66$2,285.82
2020$1.17$25.14 73.47 1,741.19$2,028.49
2019$1.11$22.63 72.60 1,667.73$1,847.01
2018$1.03$23.81 62.59 1,595.12$1,642.98
2017$0.97$21.38 61.91 1,532.53$1,490.38
2016$0.90$19.13 60.45 1,470.62$1,323.56
2015$0.82$20.94 48.13 1,410.18$1,156.34
2014$0.74$18.28 47.46 1,362.04$1,007.91
2013$0.66$16.27 46.38 1,314.58$867.62
2012$0.60$14.41 45.60 1,268.20$754.58
2011$0.54$11.37 50.26 1,222.60$657.15
2010$0.49$8.531,1721,172$571.51

In 2010, Telus shares were trading around $8.53 because of the Great Recession of 2009. Investing $10,000 at that time helped you buy 1,172 shares. Over the years, the company grew its dividend by double digits, buying more DRIP shares. The effect of compounding kicked in, and the dividend income doubled every seven years. However, the first 100% dividend income jump took only five years because of buying the dip.

Buying the dip accelerates the returns and helps you catch up on lost years of investing.

Invest $10,000 in Telus’s stock and create $2,270 in annual passive income

Now is a good time to buy as Telus stock is trading near its nine-year low of around $21. A $10,000 investment can buy 480 shares of Telus. While it would be difficult to replicate returns of the past, Telus can still offer good returns.

The telco slowed its dividend growth rate from 10% during the 2010-2017 period to 7% now. Hence, I have assumed an annual dividend growth rate of 6% in the next 10 years and a Telus share price of $30.

YearTelus DRIP shares at $30/shareTotal share count TelusTelus Dividend per share (6% CAGR)Total Dividend income
2025 480.00$1.6061$385.46
20266.42486.42$1.7024$828.11
202727.60514.03$1.8046$927.61
202830.92544.95$1.9129$1,042.41
202934.75579.70$2.0276$1,175.41
203039.18618.88$2.1493$1,330.14
203144.34663.21$2.2782$1,510.96
203250.37713.58$2.4149$1,723.25
203357.44771.02$2.5598$1,973.69
203465.79836.81$2.7134$2,270.62

As the company has already paid dividends for the first two quarters, 480 shares may only earn you $385.46 in semi-annual dividends. The DRIP could keep buying more Telus shares from dividend money. For ease of calculation, I have taken the annual dividend amount to buy DRIP shares and an average share price of $30 to normalize the price volatility.

The stock price could grow faster if the 5G boom picks up and drives Telus revenue streams. If the telco grows its revenue from the 5G infrastructure despite rising competition, the dividend growth rate and stock price could rise faster.

The compounding effect could accumulate 836.8 shares and grow your annual passive income to $2,270 by 2034.

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Concept of rent, search, purchase real estate, REIT
Dividend Stocks

The Best Monthly-Paying Dividend Stock on the TSX Right Now

This monthly dividend stock offers an attractive mix of nearly 5% yield, monthly distributions, and a deeply discounted unit price…

Read more »

Warning sign with the text "Trade war" in front of container ship
Dividend Stocks

The Trade War Is Raising Prices Again: This Canadian Grocer Can Protect Its Margins

Trade tensions can raise specific retail costs even when overall grocery inflation is slowing, putting purchasing scale at a premium.

Read more »

Forklift in a warehouse
Dividend Stocks

Apartment Rents Are Slowing: I’d Buy This Canadian REIT Instead

Cooling apartment asking rents make industrial real estate worth another look for investors seeking a different source of monthly income.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

3 Ways to Maximize Your TFSA Before Year-End

Maximize your TFSA before year-end with three different approaches to investing for long-term income and growth.

Read more »

monthly calendar with clock
Dividend Stocks

Turn Your TFSA Contribution Room Into $92 of Monthly Income

These high yield Canadian stocks offer monthly payouts and have sustainable payouts to generate steady recurring income.

Read more »

runner checks her biodata on smartwatch
Dividend Stocks

A 7% Yield Won’t Protect You From a Dividend Cut: This Payout Looks Safer

A smaller dividend backed by growing earnings can be more useful in retirement than an unsustainable headline yield.

Read more »

money goes up and down in balance
Dividend Stocks

One $7,000 TFSA Contribution Could Grow Into $50,000: Here’s How Long It Takes

Once the money is inside a TFSA account, a $7,000 investment can become $10,000, $20,000, or considerably more with compounding,…

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

You’ve Maxed Your TFSA – Now What?

Maxed your TFSA? These three Canadian growth stocks can help investors keep building wealth while they plan their next investing…

Read more »