Dividend stocks can play a vital role in long-term wealth creation, as they offer investors a combination of capital appreciation and steady passive income through regular dividend payouts. Companies that consistently pay dividends often operate mature and well-established businesses that generate stable cash flows, enabling them to reward shareholders even during uncertain economic periods. Thanks to their resilient business models and dependable payouts, dividend-paying stocks are generally less vulnerable to economic downturns and broader market volatility.
Although Canadian equity markets have rebounded sharply in recent weeks, several quality companies continue to trade well below their recent highs. One notable example is Telus (TSX: T), whose stock remains more than 26% below its recent peak. Against this backdrop, let’s examine Telus’s recent performance, growth outlook, dividend profile, and valuation to determine whether the telco presents an attractive buying opportunity for long-term investors.
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Telus’s first-quarter performance
Telus is one of Canada’s three largest telecom providers, offering nationwide wireless and broadband services to consumers and businesses. Last month, the company reported mixed first-quarter results, with revenue declining 0.6% year over year, driven by weaker contributions from its TELUS Technology Solutions and TELUS Digital segments. However, stronger performance from the TELUS Health division partially offset the decline.
Amid softer revenue and elevated operating expenses, Telus reported net income of $144 million, down from $301 million in the same quarter last year. Excluding one-time and non-recurring items, the company reported adjusted earnings per share (EPS) of $0.23, a 11.5% year-over-year decline. Meanwhile, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) slipped marginally by 0.2% to $1.84 billion.
Despite these near-term pressures, Telus generated solid free cash flow growth during the quarter, rising 19.5% to $583 million, largely driven by lower income tax payments.
Having reviewed its recent quarterly performance, let’s now examine Telus’s long-term growth prospects.
Telus’s growth prospects
The continued expansion of e-commerce, remote work, and learning, and the rising adoption of artificial intelligence (AI) technologies are driving higher demand for reliable telecommunications services, creating a favourable environment for Telus. To capitalize on these trends, the company continues to invest heavily in expanding its 5G wireless and broadband infrastructure, which should help the company grow its subscriber base and strengthen its long-term financial performance.
Beyond its core telecom operations, Telus is also expanding its healthcare and digital businesses through a combination of acquisitions and organic growth initiatives. The company continues to strengthen its presence in electronic medical records solutions, patient health management services, health benefits administration, and virtual healthcare services, all of which could become meaningful long-term growth drivers.
For 2026, management expects consolidated service revenue and adjusted EBITDA to grow by 2-4%, while forecasting free cash flow of approximately $2.45 billion, representing year-over-year growth of about 10%.
Supported by improving cash flow generation, Telus has also been focused on reducing leverage. Management expects its net debt-to-adjusted EBITDA ratio to decline to 3.3 by the end of this year and further improve to 3.0 by the end of next year. Given these initiatives and expansion opportunities, Telus appears well-positioned to deliver steady, long-term growth.
Investors’ takeaway
Telus has faced significant pressure over the past few years due to intensifying competition in Canada’s telecom industry, elevated debt levels, and the suspension of its multi-year dividend-growth program. As a result, the stock has declined roughly 26% from its 52-week high. However, this pullback has also made the valuation more attractive, with Telus currently trading at a next-12-month price-to-sales multiple of just 1.3.
In December 2025, the company paused its long-standing dividend-growth program as part of its broader effort to strengthen its balance sheet and accelerate deleveraging initiatives. Despite that move, the company continues to offer an attractive quarterly dividend of $0.4184 per share, yielding approximately 9.79%.
While some investors remain concerned about the sustainability of the payout given the company’s elevated payout ratio, any future dividend adjustment could ultimately improve Telus’s financial flexibility by enabling faster debt reduction and reinforcing its balance sheet.
Given its discounted valuation, resilient telecom operations, expanding healthcare and digital businesses, and ongoing deleveraging efforts, Telus appears well-positioned for long-term recovery and could be an attractive opportunity for income-focused investors willing to tolerate near-term volatility.
