Cogeco Communications (TSX: CCA) stock has fallen 18% since March 2026. The reasons were the exit of a major shareholder, an earnings miss, and rising debt levels. Cogeco is also a player in the telecom space, but it operates on an asset-light model. Unlike Mobile Network Operators (MNOs) BCE and Telus Corporation (TSX: T), a majority of Cogeco’s wireless services are under Mobile Virtual Network Operators (MVNO) agreements. MVNOs lease the network infrastructure of MNOs and earn revenue by providing good pricing, service quality, and network access.
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An ideal TSX dividend stock to buy and hold for a lifetime
While BCE and Telus faced pricing competition from MVNOs, they are now coming on par with MVNOs. Telus saw the decline rate of average revenue per user (ARPU) slow from 3.7% in the first quarter of 2025 to 1% in the first quarter of 2026. Whereas Cogeco’s revenue slipped 5.3% year-over-year in the first quarter of 2026. Telus has a net debt of 3.5 times its adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), while Cogeco’s ratio is 3.2 times.
On the one hand, Telus has reduced its capital spending on fibre infrastructure and is growing revenue by leasing competitors’ networks. On the other hand, Cogeco is investing in fibre infrastructure. For 2026, Cogeco reduced its capex on network expansion projects to $85–$110 million from $100–$140 million.
Telus is gradually tapping Cogeco’s model, and Cogeco is building some infrastructure as per regulations. Both stocks offer quarterly dividends and grow them annually. However, their share price has fallen significantly amidst rising debt and price competition.
The share price dip has inflated the dividend yield to 9.8% for Telus and 6.3% for Cogeco. Telus has a 21-year dividend growth history, while Cogeco has a 14-year history.
Which is an ideal dividend stock to hold for a lifetime
Honestly, no stock is a lifetime hold. Every stock needs to be reviewed to determine if the business model remains relevant and generates sufficient cash. In the case of Telecom, price competition is jeopardizing the cash flow growth.
Telus is an ideal stock to hold for the time being, as its vast infrastructure gives it an edge in terms of avoiding capital spending on network expansion. Its management is well-acquainted with managing a leveraged and asset-heavy balance sheet. Its shift to deleveraging could see some short-term hiccups as the company sells non-core assets to pay off debt. Some hiccups include a pause in dividend growth and phasing out the discount on the dividend reinvestment plan.
There is a risk of a possible dividend cut as its payout ratio is 112% after adding the DRIP amount. However, Telus can sustain it as the actual cash outflow in dividends after deducting DRIP is 73%, well within the long-term range of 60–75%. One question that erks me is, does the 60–75% payout ratio target look sustainable in the changed environment? The target was set in an environment where Telus could determine its prices. The new environment is that of a price war. Until the telco finds ways to earn through multiple sources from the same subscription amount, returns on investment may not justify a 60–75% payout ratio. BCE has already reduced its long-term target to 40–55% in the light of the changed business environment.
A better risk-to-reward ratio
Cogeco has a 30% dividend payout ratio that gives it financial flexibility to sustain dividends even when revenue falls. The company has slowed its dividend growth rate to 7% in 2026 from 10% in and prior to 2023. On the face of it, Cogeco looks like a better deal. But Telus has a better risk-reward ratio than Cogeco.
For starters, even if Telus slashes dividends by 40%, you will have 6% yield. If Telus doesn’t slash dividends, a 9.8% yield is lucrative to lock in for the long term, which looks almost like a lifetime. Buying Cogeco will help you lock in a 6.3% yield. Its dividend growth capacity could slow as it expands its business.
If you want higher dividends, Telus is a good option. If you want consistent dividend growth, Cogeco is a better option.
