Having a goal is the first step. The next step is to carve out a route to achieve this goal and start walking. Often, we delay investments for the right time and opportunity, but those who made money in stocks never wait. They keep walking down the investment path, gaining, losing, but never stopping. If you want to build a passive income, don’t wait for things to settle and lose out on the opportunity of compounding with dividend stocks.
Telus (TSX: T) is a dividend stock that can compound your returns quarterly.
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Invest $7,000 in this 7.96% dividend stock
Telus’s share price has dipped almost 10% since August after the Canadian government cabinet upheld the Canadian Radio-Television and Telecommunications Commission (CRTC) decision on network leasing.
Unlike BCE and Rogers Communications, Telus accepted the regulatory change long ago and leased competitor networks to expand market share. However, the stock continues to trade at a lower price because of uncertainty around the network leasing regulation due to constant retaliation from competitors. The lower share price is increasing its yield to 7.96%.
Is there value in Telus stock to invest $7,000?
While debt is a cause of concern, Telus’s capital-allocation strategy can manage debt. The telco has slowed its dividend growth rate from 7-10% in 2025 to 3-8% for the 2026-2028 period. It has also slowed its capital spending in the fibre network and is diverting investments in building high-margin artificial intelligence (AI) infrastructure. It has opened Canada’s first fully sovereign AI factory powered by Nvidia’s graphics processing cards. Accenture, OpenText, and League are leveraging Telus’s infrastructure to offer AI solutions.
In the next few years, Telus will focus on monetizing its AI, telehealth, and other digital solutions to increase average revenue per user and reduce debt. Until then, high dividend yield will offset a slower dividend-growth rate.
Can Telus continue to pay dividends?
The growth prospects are bright for Telus, as rising competition did not affect its revenue growth. A slowdown in capex helped it reduce the dividend payout ratio from 81% in 2024 to its target range of 75% in the second quarter of 2025. This hints that the company can continue paying dividends.
The 5G and AI opportunities can boost free cash flows in the years to come and accelerate its dividend growth in the long term.
This dividend stock can give $568 in passive income
Telus not only grows dividends but also offers a dividend-reinvestment plan (DRIP) that gives you shares equivalent to the dividend amount. Since dividend is paid quarterly, DRIP compounds the dividends quarterly.
Growth in the dividend per share every six months and a lower share price allow the DRIP to accumulate more shares.
A $7,000 investment can buy you 334 shares of Telus at $20.91 per share. Taking the 2025 annual dividend per share of $1.67, your 334 shares can give you $558 in annual passive income. However, we are already in the fourth quarter, and the company is likely to increase its dividend by 1.5% to 3% in December 2025.
| Period | Dividend growth at 1.5% | Dividend on 334 shares | Dividend growth at 3% | Dividend on 334 shares |
| Q1 2026 | $0.4225 | $141.1299 | $0.4288 | $143.2155 |
| Q2 2026 | $0.4225 | $141.1299 | $0.4288 | $143.2155 |
| Q3 2026 | $0.4289 | $143.2468 | $0.4417 | $147.5120 |
| Q4 2026 | $0.4289 | $143.2468 | $0.4417 | $147.5120 |
| $568.7533 | $581.4550 |
A 1.5% bi-annual growth rate will increase your passive income to $568.75. If Telus stock continues to trade near $22 price, 25.85 DRIP shares will be added in 2026, and you will earn a dividend on 359.85 shares (334 shares + 25.85 DRIP shares) in 2027.
This compounding can build a sizeable passive income in 10-15 years under DRIP. Now is a good time to invest a lump sum as the yield is high and the stock price is low, which accelerates DRIP compounding.
