The pullback in high-quality stocks provides solid buying opportunities for investors with a long-term outlook. Moreover, when fundamentally strong dividend stocks decline, they offer investors an opportunity to lock in higher yields and benefit from a share price recovery. Against this backdrop, one TSX stock that looks attractive on a pullback is Telus (TSX:T). The telecom giant currently offers a yield of over 9.7%.
The telecom has faced significant pressure over the past year. Shares of Telus have fallen roughly 16.2% and now trade nearly 26% below their 52-week high.
Telus has consistently returned significant cash to its shareholders over the past several years. Since 2004, it has returned approximately $30 billion to investors through dividends and share repurchases. Dividends alone accounted for nearly $25 billion of that total.
However, recent developments have introduced uncertainty around the company’s future dividend payouts. In December 2025, Telus announced that it would pause its dividend growth program. Although the company maintained its quarterly dividend at $0.4184 per share, the decision to halt future increases raised concerns over future distributions.
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Telus stock: Strong cash flow to support the current payout
Despite the short-term challenges, Telus’s ability to sustain its existing payout appears relatively solid. It is acquiring new customers, retaining existing ones, and generating strong free cash flow, which strengthens its financial position. At the same time, management remains focused on reducing debt levels, while capital expenditures are expected to decline in the coming years. These factors provide Telus with greater financial flexibility and improve its ability to maintain its payouts.
Telus is likely to benefit from strength in its PureFibre and 5G+ wireless broadband networks. Moreover, its growing AI capabilities and a focus on attracting higher-value customers augur well for growth.
The company’s first-quarter 2026 results highlighted the resilience of its business model. During the quarter, TELUS added 262,000 mobile and fixed customers, driven by continued demand for premium bundled services across Canada.
Management expects free cash flow to grow at a compound annual rate of at least 10% through 2028, supported by higher EBITDA, lower capital expenditures, and ongoing efficiency improvements. Moreover, it is focusing on deleveraging its balance sheet. Telus plans to reduce its leverage ratio to 3.3 times or lower by the end of 2026 and to 3 times or better by the end of 2027, while maintaining its current dividend payouts.
Beyond telecom, TELUS is expanding into healthcare and digital services. TELUS Health delivered another strong quarter, with service revenue and adjusted EBITDA growing steadily, supported by innovation and disciplined execution. Meanwhile, TELUS Digital continues to expand its AI and data capabilities, with AI-related revenue increasing 22% year over year in the first quarter.
Overall, its growing subscriber base, strength in the healthcare and digital businesses, and improving financial flexibility should continue to support its payouts.
The bottom line
Even though dividend growth is currently on hold, Telus’s high yield, management’s focus on sustaining its payouts, and the recent pullback make the stock appealing.
