An 11.3% yield is the kind of number that makes income investors stop scrolling. However, it should also make them squint.
A yield that high can mean opportunity, but it can also mean the market is waving both arms and shouting, “Please read the fine print.” Helpful? Yes. Subtle? Not even a little.
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What to watch
That’s why Tax-Free Savings Account (TFSA) investors need to think about income differently. The Canada Revenue Agency says the TFSA dollar limit for 2026 is $7,000, and that room was added on January 1. Investment income earned inside a TFSA is generally tax-free, which makes the account especially useful for dividend stocks.
The appeal is simple. Put a strong dividend stock in a TFSA, collect income, reinvest it, or withdraw it later without creating taxable income. That’s all well and good, but what dividend stock should investors choose? With so many options out there, and a high dividend yield waving a red flag in your face, it can be hard to decipher what’s good and what’s not so good.
That brings us to TELUS (TSX: T). TELUS stock is one of Canada’s major telecom companies, offering wireless, internet, TV, security, health, and digital services. It is not a tiny growth stock trying to become relevant. It already serves a massive customer base in services Canadians use every day, even if we all pretend we are going to spend less time on our phones next week. So, is it worth your while?
More on TELUS stock
The income case is hard to ignore. TELUS stock currently offers an annual dividend yield of about 11.3% at writing, and the company’s latest declared dividend was $0.4184 per share, paid quarterly.
Yet TELUS stock also has a business case, not just a yield case. In the first quarter of 2026, TELUS stock reported stable cash from operations of $1.05 billion and free cash flow growth of 19% to $583 million.
Free cash flow is the number to watch. Dividends do not survive on good intentions, brand recognition, or Canadians forgetting to cancel subscriptions. They need cash. Stronger free cash flow gives TELUS stock more room to fund its network, manage debt, and keep paying shareholders.
That waving red flag
Still, this is not a “buy with both hands and never check again” situation. TELUS stock has already paused dividend growth until its share price and dividend yield better reflect management’s view of its growth prospects. The company says it intends to keep paying the dividend at its current nominal level, but it also says there is no guarantee it will resume semi-annual increases or maintain its dividend growth program through 2028.
That is the risk section, and investors should not skip it like terms and conditions on a phone plan. A very high yield can signal pressure. TELUS stock still faces debt, intense telecom competition, heavy capital needs, and slower growth than investors once expected.
Even so, TELUS stock could work for TFSA investors who understand the trade-off. This is not the safest dividend stock on the TSX. It is a high-income recovery stock with a large customer base, improving free cash flow, and a dividend that could deliver serious tax-free income if maintained.
Bottom line
I would not call TELUS a perfect fit for every investor. Younger growth investors may prefer a stock with stronger capital appreciation potential. Conservative retirees may want a lower yield with less dividend anxiety. A full $7,000 contribution could create meaningful tax-free cash flow, and any recovery in the share price would make the story even better from here.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| T | $14.72 | 475 | $1.67 | $793.25 | Quarterly | $6,992.00 |
In the end, for income-focused TFSA investors willing to accept the risk, TELUS stock deserves a close look.
