The reality for investors looking at top-tier dividend stocks right now is that there’s a wide variance in the quality of such names in the market.
Once a top dividend stock I touted as worth buying for the long-haul, Telus (TSX: T) has since fallen from grace.
Indeed, the chart above highlights the troubles this name has seen of late.
Here’s why I think Fortis (TSX: FTS) could be the much better pick for long-term investors.
Indeed, Fortis remains a top dividend name I’m highly bullish on for the coming decades, and there are plenty of reasons why.
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The bear case on Telus
Telus’s sky-high yield looks tempting, but the fundamentals scream caution, while Fortis delivers safety and growth you can bank on.
Telus boasts a whopping 9% dividend yield, but that’s no bargain. Indeed, I think this yield is actually a red flag from plunging stock prices amid balance sheet woes. The company’s payout ratio exceeds 100%, hitting 148% in recent quarters. What this means in layman’s terms is that the company can’t cover dividends from earnings alone and is dipping into its balance sheet.
Telus’ management teams has paused dividend growth to target a 75% free cash flow payout, with net debt-to-EBITDA at 3.5 times (aiming for 3.3x by end-2026). To me, this signals high leverage risks in a telecom sector facing competition and capex for the AI and 5G buildouts. With Q4 2025 earnings missing estimates (EPS $0.20 vs. $0.25) and revenues down 2% year-over-year, that’s hardly the stability dividend hunters crave.
I think a dividend cut is in the cards for Telus, particularly if the company’s deleveraging efforts fail. This is a dividend name I’d be very cautious around right now, given how the company’s fundamentals have shifted.
The bull case on Fortis
Fortis, the utility powerhouse I continue to pound the table on, offers a sustainable 3.3% yield backed by a healthy 73% payout ratio. That’s important to note in relation to Telus, as Fortis’ dividend is well-covered by earnings. With a durable cash flow model driven by regulated utility contracts with commercial and residential payers, this is a stock that should benefit from continued population growth as well as surging demand from rising electricity usage tied to AI and other technological trends.
Perhaps the most notable reason why I continue to bang the table on Fortis, however, is the company’s track record of raising its dividend for 52 straight years. Over the course of this time, dividend growth has remained in the mid-single-digits. And over time, it’s expected that Fortis will continue to provide 4–6% annual dividend growth guided through 2030. That’s something to write home about.
This dividend growth is expected to be fueled by 7% rate base expansion from $5.6B in 2025 capex. The company’s adjusted EPS rose to $3.53 in 2025 from $3.28, with Q4 net earnings up despite one-offs. This showcases the strength of its regulated cash flows, which have the potential to shrug off economic storms.
For those thinking long term, there are few better dividend stocks in the market to choose from right now. That’s a reality, in my view.
