Telus (TSX:T) made the headlines in the last two months as the dividend knight paused dividend growth for the first time in 22 years. The stock was offering a whopping 9.5% yield until November 2025, but this yield is gradually falling as the company focuses on improving its share price. Telus is a good opportunity to lock in a high yield. But there is a risk of a dividend cut if it is unable to reduce its debt and grow free cash flow (FCF).
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This TSX dividend stock to consider buying over Telus
If you are retiring this year and want your payout to beat inflation, consider investing in Cogeco Communications (TSX:CCA). It is a beneficiary of the Mobile Virtual Network Operator regulatory change that allows small operators to access the infrastructure of Telus and BCE and resell their mobile services at a lower price.
Like Telus and BCE, Cogeco also has a high leverage of 3.2 times net debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA). However, its dividend-payout ratio is only 30% of the FCF, as against the two giants’ ratio of more than 100%. The lower payout ratio gives it room to grow its dividends for the coming years.
Moreover, Cogeco is investing in network expansion in both Canada and the United States. Despite this, it expects revenue to fall by 1-3% in fiscal 2026 due to a decline in video and wireline subscribers and a competitive pricing environment. However, it will grow its FCF by 0-10% by reducing interest expense and restructuring the business.
Although Telus has the advantage of market share and a broader service offering, Cogeco has the regulatory advantage. This advantage has shifted high dividend growth capacity to Cogeco. It has increased its dividend by 7% in 2026, slightly lower than 8% in 2025 and 10% in 2024.
This benefit will gradually normalize, and Cogeco’s dividend growth will mirror that of Telus, which is 3-8%, in a competitive pricing environment.
Why is this stock a buy now?
Cogeco can give you a safety net of assured dividend growth for the next two years, which Telus cannot. The dividend-growth pause of Telus can be compensated for by the mid-single-digit dividend growth of Cogeco.
At the current market price of around $73, it is suggested you wait a while, as there is a sudden spike in share price after the fiscal 2026 first-quarter earnings release. It is because Cogeco maintained its 7% dividend growth despite its revenue and FCF falling 4.3% and 15.7% year over year, respectively. The decline is likely due to timing and seasonality.
The current share price is unsustainable and could dip to $65-$68, a good entry point to lock in a 5.8% dividend yield. This is lower than Telus’s 8.8% yield and dividend-reinvestment plan (DRIP) offering, which is nonexistent in Cogeco. However, Cogeco can hedge your passive income from the risk of a Telus dividend cut, if any.
A $5,000 investment in Cogeco and Telus will fetch dividend income of
Assuming you invest $5,000 in both stocks, you can buy 265 shares of Telus and 73 shares of Cogeco at a $68 price point. Telus is a better stock if it sustains its current dividend of $1.67. It will not only give a higher dividend in 2026 but also in 2028 without any dividend growth.
Cogeco’s share is a buy to hedge against a potential 40% dividend cut by Telus.
| Stock | Share Price | Dividend per Share | Dividend income in 2026 | Number of Shares purchased for $5,000 | 2-year estimated Dividend CAGR | Estimated Dividend per share in 2028 | Dividend income in 2028 |
| Telus | $18.87 | $1.67 | $443.61 | 265 | 0% | $1.67 | $443.61 |
| Cogeco Communications | $68.00 | $3.95 | $288.35 | 73 | 6% | $4.44 | $324.12 |
| Telus (cuts Dividend by 40%) | NA | $1.00 | $265.53 | 265 | 0% | $1.00 | $265.53 |
