Three years from now, I believe TELUS (TSX: T) stock will be trading meaningfully higher than it is today, and the math isn’t complicated.
The Canadian dividend stock is in the middle of a deleveraging cycle, free cash flow is accelerating, and two of its fastest-growing divisions are about to hit their stride.
If you’re patient, this is a stock that could quietly deliver strong total returns while paying you a fat dividend along the way.
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The TELUS stock price estimates
Let’s start with the analyst estimates, sourced from TIKR.com.
- In 2025, TELUS posted normalized earnings per share (EPS) of $0.92. By 2029, analysts estimate that the number will climb to $1.39.
- Revenue is projected to grow at a compound annual rate of 3%, reaching roughly $23 billion by 2028.
- EBITDA (earnings before interest, tax, depreciation, and amortization) margins are expected to hold steady in the 36% range throughout.
Now here’s where it gets interesting. TELUS currently trades at a forward price-to-earnings (PE) ratio of 19.4 times, almost exactly in line with its 10-year historical mean of 19.6 times.
That gives us a clean base case: apply the historical mean PE of roughly 19.6 times to the 2028 EPS estimate of $1.23, and you get a share price target of around $27, above the current price of $18.10
In a bull scenario, where sentiment improves, the dividend discount narrows, and the PE re-rates toward the higher end of its historical range (27.7 times, that same $1.39 EPS estimate implies a share price closer to $38. That’s roughly 110% upside from current levels.
The bear case assumes TELUS trades near its historical trough multiple of 14 times. At $1.39 in EPS, that puts the stock around $19.50, roughly 5% above where it sits today. Not spectacular, but a reminder that valuation compression is a real risk if execution stumbles.
The bull case for the Canadian dividend stock
On TELUS’ earnings call, outgoing CEO Darren Entwistle outlined a series of growth drivers that support the bull case.
- Free cash flow hit a record $2.2 billion in 2025, up 11% year over year.
- TELUS is now guiding for approximately $2.45 billion in free cash flow for 2026, roughly another 10% increase. That kind of consistent cash generation is what funds both the dividend and the deleveraging plan.
- The leverage ratio dropped from 3.9 times EBITDA to 3.4 times in 2025 and is expected to reach three times or better by the end of 2027. Lower debt means lower interest costs and more cash available for shareholders.
Additionally, revenue from TELUS Digital’s AI-enabling capabilities rose 44% in Q4 and 35% for the full year. The company is targeting $2 billion in AI-enabling revenue by 2028. TELUS Health, meanwhile, is expected to post double-digit EBITDA growth in 2026. Together, they represent a meaningful shift in the quality and durability of TELUS’ earnings profile.
While you wait for the share price to re-rate, TELUS pays a quarterly dividend and offers a yield of 9.2%. At the current payout level and a prospective cash dividend payout ratio of roughly 70%, the income stream is well supported.
Management has signalled dividend growth will resume once the deleveraging plan is further advanced and the discount reinvestment plan is fully removed.
Three years from now, the base case puts TELUS at around $27. The bull case pushes toward $38. Either way, you’re collecting dividends while the story plays out. That’s a combination worth paying attention to.
