If you’re a dividend investor, Telus (TSX: T) has likely caught your attention. The Canadian communications giant currently offers an eye-catching 11.3% dividend yield, based on its closing share price of $14.76 on July 9.
An 11% yield is hard to ignore as it will significantly enhance the income potential of any portfolio. But when a dividend yield climbs this high, it raises questions about whether the payouts are still sustainable or are signalling trouble ahead.
Notably, Telus has long been one of the TSX’s top dividend stocks. Since 2004, Telus has returned approximately $25 billion to shareholders through dividends. Moreover, under its dividend growth program, the company consistently rewarded shareholders with regular payout increases, making it a reliable income investment.
However, past performance doesn’t guarantee future payouts. So before you jump to buy Telus stock, let’s look at whether its high yield is worth counting on.
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Telus paused its dividend growth program
For years, Telus has been one of Canada’s most reliable dividend-growth stocks. However, that reputation took a hit in December 2025 when management announced a pause to its dividend growth program, while maintaining the quarterly payout at $0.42 per share.
The decision reflects a shift in priorities. Rather than increasing shareholder payouts, management is focusing on strengthening the balance sheet and reducing net debt. While preserving the dividend offers some reassurance for income investors, the pause also signals mounting pressure on the company’s earnings.
The broader industry backdrop helps explain the move. Canada’s telecom sector is facing one of its toughest competitive environments in years. Aggressive price competition is squeezing margins. At the same time, slowing subscriber growth, regulatory headwinds, and increased competition from new entrants continue to weigh on the industry’s profitability.
Telus is already feeling the impact. Adjusted net income came in at $1.41 billion in 2025, down from $1.55 billion in 2024. The pressure has continued into 2026, with adjusted earnings per share (EPS) falling 12% year over year to $0.23 in the first quarter.
Is Telus’s high dividend yield worth the risk?
At first glance, Telus’s soaring dividend yield makes it an attractive choice for income investors. Management expects to continue supporting its dividend through steady growth in free cash flow.
For 2026, Telus expects to generate approximately $2.5 billion in consolidated free cash flow, representing about 10% growth from the previous year. Based on that forecast, the dividend would consume roughly 75% of free cash flow, leaving a reasonable cushion to support current payouts.
The company’s fundamentals also provide some reassurance. Telus continues to add new customers, maintain strong subscriber loyalty, and reduce its debt. At the same time, capital spending is expected to decline, giving the company financial flexibility and improving its ability to return cash to shareholders over the long term.
Taken together, these factors suggest that the current dividend remains reasonably well supported.
That said, investors shouldn’t overlook the risks. Telus’s exceptionally high dividend yield raises legitimate questions about the payout’s long-term sustainability. Intense competition in Canada’s telecom industry continues to pressure earnings growth, adding uncertainty to the future payouts.
For now, Telus may appear capable of sustaining its dividend, but the margin for error is narrower than it once was. The pause in dividend growth, ongoing competitive pressures, and the stock’s unusually high yield all point to the need for a cautious approach.
