Dividend stocks are typically well-established companies with healthy cash flows that return a portion of their profits to shareholders through regular payouts. As a result, investors can benefit from both long-term capital appreciation and a steady stream of passive income. In addition to generating regular income, dividend stocks can help build long-term wealth through compounding when distributions are consistently reinvested.
However, dividends are never guaranteed. Therefore, investors should focus on high-quality dividend-paying companies with strong fundamentals, resilient business models, and reliable payout histories. Against this backdrop, let’s look at two dividend giants that appear attractive following the recent pullbacks.
Source: Getty Images
Telus
Telus (TSX: T), one of Canada’s three largest telecom providers, has remained under pressure over the last three years due to rising competition, elevated debt levels, and the suspension of its dividend growth program. The stock has lost nearly half its value over this period and is down 0.7% year-to-date, underperforming the broader equity markets. However, the prolonged decline has pushed its forward dividend yield to an attractive 9.5%, while the stock trades at relatively modest next-12-month price-to-sales and price-to-earnings multiples of 1.3 and 19.1, respectively.
Meanwhile, demand for telecommunications services continues to rise amid rapid technological advancements, growing data consumption, and increased adoption of remote work and digital commerce. To capitalize on these trends, Telus continues to expand its 5G and broadband infrastructure, which could support steady long-term growth. Management expects revenue and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) to rise by 2%–4% this year.
The company is also strengthening its cash flow profile. After increasing free cash flow by 11% to $2.2 billion in 2025, Telus expects another 10% increase this year to approximately $2.5 billion. In addition, it plans to reduce capital expenditures by 10% to $2.3 billion, thereby further improving financial flexibility. Management also aims to lower its net debt-to-adjusted EBITDA ratio to 3.3 by the end of this year and to 3 by the end of 2027.
Although concerns remain about the sustainability of its dividend given the elevated payout ratio, any potential adjustment could improve the company’s financial flexibility by accelerating debt reduction and strengthening its balance sheet. Considering its attractive valuation, improving free cash flow profile, and strong long-term industry fundamentals, I believe Telus remains an appealing investment despite near-term volatility.
Algonquin Power & Utilities
Another dividend stock that looks attractive right now is Algonquin Power & Utilities (TSX: AQN), which provides natural gas, water, and electricity services to approximately 1.3 million customers across the United States, Canada, Chile, and Bermuda. The utility stock has remained under pressure since its fourth-quarter results in March, declining about 11.7% from its 52-week high.
Following the recent pullback, Algonquin’s valuation has become more attractive, with the stock currently trading at forward price-to-sales and forward price-to-earnings multiples of 1.9 and 17.3, respectively. In addition, its forward dividend yield has risen to 4.2%.
Meanwhile, the company reported its first-quarter results today, with adjusted net income declining 8.6% year over year to $99.6 million. Lower earnings from its Regulated Services Group and Hydro Group weighed on overall profitability, while adjusted earnings per share (EPS) slipped slightly from $0.14 to $0.13. Unfavourable weather conditions, along with higher gas safety, operational, and maintenance expenses, also put pressure on earnings during the quarter.
Despite the near-term challenges, Algonquin continues to invest in long-term growth. The company plans to invest $3.2 billion between 2026 and 2028, which could expand its rate base at an annualized rate of 5–6%, reaching $9.7 billion by the end of 2028. Alongside these investments, favourable rate revisions could support stronger earnings growth in the coming years.
Considering its regulated asset base, visible growth pipeline, improving financial position, and attractive dividend yield, I believe Algonquin is an appealing long-term investment at current levels.
