With the TSX steadily hitting new highs, dividend investors are wondering which Canadian stocks might still be good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on income and long-term returns.
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Telus
Telus (TSX:T) trades near $22 per share at the time of writing, compared to $34 at one point in the spring of 2022. The stock is up 12% in 2025; however, bargain hunters have moved in on the hopes that the worst is over for the telecoms provider.
Telus initially took a hit in the second half of 2022 and through most of 2023 as a result of rising interest rates. The Bank of Canada aggressively raised rates to get inflation under control. This immediately drove up interest expenses on variable-rate debt and made it more expensive for companies to access new funding. Telus borrows funds to finance its capital investments, which includes the expansion and upgrading of the wireless and wireline network infrastructure. Telus said it finished Q2 2025 with about $33 billion in debt.
Many rate-sensitive stocks bounced back in 2024 as the Bank of Canada finished raising rates and then began to cut them in the second half of last year. Telus, however, continued to face headwinds. Its Telus Digital (Telus International) subsidiary ran into revenue challenges. At the same time, Telus saw margins get squeezed due to a price war among Canadian providers of mobile and internet services.
Cuts to immigration numbers, particularly foreign students, have also impacted Telus and its peers. Newcomers had been a valuable source of client additions for data plans, as well as for sales of new devices. That segment isn’t expected to recover in the near future as Canada continues to reduce the number of new entrants to the country.
Opportunity
Aside from the immigration headwinds, the worst of the previous challenges should be in the rearview mirror. The price war has ended with rates on mobile plan offers now much higher than last year. Telus plans to take Telus Digital private and the other subsidiaries, including Telus Health and Telus Agriculture and Consumer Goods, are performing well and growing at a steady pace.
Telus is monetizing non-core assets to raise funds to reduce debt. It recently announced the sale of 49.9% of its cell tower portfolio for $1.3 billion. Steady debt reduction is planned over the next few years.
Telus expects to deliver growth in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2025. Free cash flow is targeted at $2.2 billion. This should support the dividend. Telus has a strong track record of raising the payout annually. The current distribution is 7% higher than it was at this time last year.
Investors who buy Telus stock at the current share price can pick up a 7.6% dividend yield.
The bottom line
Interest rates are expected to continue falling as the Bank of Canada shifts focus from fighting inflation to shoring up a weakening economy. Lower rates will free up more cash for Telus to reduce debt and support the dividend payments. This is a contrarian pick right now, but income investors with some cash available should put Telus on their radar.
