Canadian communications giant Telus (TSX:T) has long been one of the top dividend-paying companies. It has consistently paid and increased its dividends for years. What continues to draw attention to Telus is its high 9.2% yield, making it a compelling passive-income stock.
However, a high yield doesn’t indicate that the stock is a reliable income stock. Further, when a stock’s yield climbs into unusually high territory, it can sometimes signal underlying financial strain rather than strength. For Telus, its high yield raises the risk of a dividend cut.
Adding to the concerns, J.P. Morgan analyst Sebastiano Petti recently downgraded this Canadian stock, warning that Telus’s pace of dividend growth could be challenging to maintain. The analyst also pointed to an increasingly competitive landscape in Canada’s telecommunications market, adding uncertainty to the company’s future performance.
Against this background, is Telus stock a buy? Let’s take a closer look.
Telus’s dividend payment history
Telus has consistently paid and increased its dividend through its multi-year dividend growth program. Since 2004, Telus has returned over $29 billion to investors, roughly $24 billion through dividend payouts and another $5.2 billion through share buybacks. This track record reflects the company’s financial strength and a commitment to enhancing shareholder value.
Telus extended its long-standing policy of semi-annual dividend increases, setting a target to boost its dividend by 3% to 8% annually from 2026 through 2028. This extension continues a dividend growth strategy originally announced back in 2011, giving investors visibility into future income potential. Telus is targeting a payout ratio of 60% to 75% of free cash flow, high enough to reward shareholders while ensuring sustainability.
Most recently, on November 6, 2025, Telus announced a quarterly dividend of $0.4184 per share, 4% higher than the same period last year. With its current share price, that translates into a high yield of about 9.2%.
Should you buy Telus stock now?
Telus’s solid dividend payment and growth history, and visibility into future payouts make it a compelling income stock. However, the concerns around the sustainability of Telus’s high yield are also valid. Competition in Canada’s telecom sector has intensified, and Telus has been forced to lower prices in the Mobile segment to keep customers from switching to rivals. That strategy may help retain customers, but it has also squeezed margins and weighed on earnings growth.
Further, Telus reported a significant drop in equipment sales, down $72 million in the third quarter of 2025 and $52 million through the first nine months of the year. The decline stems from fewer contracted device sales and heavier discounting across the industry.
Amid challenges, Telus continues to benefit from its expansive wireless infrastructure and growing PureFibre network. Moreover, its comprehensive bundled services are driving its customer base. The company is increasingly prioritizing profitable subscriber additions rather than sheer volume, which should support healthier margins over time. Telus is also making progress on cost discipline and boosting performance in its health segment, which is becoming a larger contributor to the business.
Looking ahead, as capital spending eases and EBITDA continues to improve, Telus is likely to deliver solid free cash flow. This will help the company deleverage its balance sheet while maintaining its payouts. Also, its ongoing asset monetization initiatives will help reduce debt and improve cash flow, supporting future payouts.
In short, Telus remains an appealing dividend stock, supported by improving free cash flow, cost discipline, and a strong network foundation. While competitive pressures and margin concerns persist, its focus on profitable growth and debt reduction provides stability.
