Is TELUS’s Dividend Still Worth Counting on?

TELUS’s 10% yield looks tempting, but it’s also the market flashing a warning sign.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published June 26, 9:30 am EDT

Key Points

TELUS still generates recurring revenue from essential services, and data demand supports the core business.
The dividend looks supportable today because free cash flow is improving, even though dividend growth is paused.
Debt, capital spending needs, and fierce competition are the key risks that could pressure the payout.

TELUS (TSX: T) has become one of the hardest dividend stocks on the TSX to judge.

The yield looks huge at 10.3% at writing. The business still provides essential telecom services. The stock also trades well below past highs. For income investors, that combination can look tempting. But a big yield can mean two very different things. It can signal opportunity. It can also signal doubt.

So, is TELUS’s dividend still worth counting on? The answer is yes, but not blindly.

Investor wonders if it's safe to buy stocks now — Source: Getty Images

T

TELUS remains one of Canada’s largest telecom companies. It provides wireless, internet, TV, security, health, business, and digital services to millions of customers. Those services aren’t optional for most households or companies. People may cut back on restaurants, travel, or new furniture before they cancel their phone plan or internet connection.

That gives TELUS a strong base of recurring revenue. Telecom companies also benefit from long-term demand for data. Canadians keep using more mobile data, streaming more content, connecting more devices, and relying more on cloud-based services. Businesses need secure networks, fibre connections, and digital tools. Those trends support TELUS’s core operations.

The dividend is the main attraction today. TELUS currently pays $0.4184 per share each quarter, or about $1.67 annually. With the stock beaten down, that works out to a yield above 10%. That’s the kind of number that grabs attention fast, especially for retirees and passive-income investors.

So, what happened?

Investors need to separate the dividend from dividend growth. TELUS paused its dividend-growth program late in 2025. That doesn’t mean the dividend was cut. It means investors shouldn’t expect the old pattern of regular increases to continue for now. Management wants the share price and business outlook to better reflect TELUS’s growth prospects before restarting increases.

That was the right move. TELUS carries a heavy debt load, and telecom companies need constant capital spending to maintain and expand networks. The company also faced pressure from higher interest costs, restructuring, and competition. Pushing dividend growth too hard in that environment would only create more stress.

The good news is that free cash flow is improving. In the first quarter of 2026, TELUS generated $583 million in free cash flow, up 19% from the same quarter last year. The company also reaffirmed its target of about $2.45 billion in free cash flow for 2026. That number makes the dividend case feel more real. TELUS doesn’t need a perfect year to support the payout. It needs cash flow to keep moving in the right direction.

Looking ahead

There are also growth pockets future investors should consider. TELUS continues to invest in fibre, 5G, business services, and Canadian artificial intelligence (AI) infrastructure. Its Rimouski Sovereign AI Factory was sold out, and a second facility in Kamloops adds another angle to the digital infrastructure story. These projects won’t fix the balance sheet overnight, but they show TELUS still has growth options beyond traditional phone plans.

The risk is still clear. If free cash flow disappoints, debt stays elevated, or competition squeezes margins, the dividend could come under more pressure. The market is already telling investors it wants proof. A nearly 10% yield is not a casual vote of confidence. It reflects concern.

That doesn’t make TELUS a bad buy. It makes it a stock for patient investors who understand the tradeoff. The dividend looks worth counting on today, but the growth part of the story is paused. Investors buying now should expect income first, recovery second, and dividend growth later.

Bottom line

For a passive-income portfolio, TELUS could still deserve a spot. The yield is attractive, the services are essential, and free cash flow is moving in the right direction. Just don’t buy it assuming the old dividend-growth machine is back, though now even $7,000 can at least help ease any volatility through dividends.