Even as Canadian stocks have continued to surge in recent years, it’s becoming increasingly difficult for income investors to look at a big dividend yield and know whether they should be excited or concerned. Telus (TSX: T) and BCE (TSX: BCE) could be good examples here. While their dividends still look attractive, every time I compare them with Rogers Communications (TSX: RCI.B), I continue to prefer Rogers instead.
Although Rogers won’t pay me as much income upfront, I’d rather accept a smaller yield right now when I like what’s happening to the cash behind it. On the one hand, Rogers’ free cash flow is growing as capital spending declines, and its sports assets improve its outlook further. On the other hand, Telus is still rebuilding after its recent dividend reset, and BCE’s heavy investment continues to weigh on free cash flow.
In this article, I’ll explain why I’m willing to pass on the bigger payouts from Telus and BCE and choose Rogers as my preferred dividend stock instead.
Source: Getty Images
Rogers Communications stock
Simply put, Rogers operates across wireless, cable, and media businesses in Canada. After climbing nearly 16% over the last two months, its stock currently trades at $52.44 per share with a market cap of $28.2 billion and a 3.9% annualized dividend yield. Meanwhile, Telus and BCE offer higher yields of 5.7% and 5.4%, respectively.
What interests me even more, though, is the direction of its underlying business. In the second quarter, Rogers delivered an 8% year-over-year (YoY) increase in its total service revenue to about $5.1 billion. With this, its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose 3% to $2.4 billion.
Last quarter, the company’s free cash flow also moved higher, rising 6% YoY to nearly $1 billion. That improvement came as its capital expenditures fell 16%. As a result, Rogers reduced its capital intensity by 3.5 percentage points to 12.4%, its lowest level since the first quarter of 2008.
Adding to the optimism, Rogers added 40,000 mobile phone customers during the latest quarter, including 22,000 postpaid additions, along with 17,000 retail Internet subscribers.
Another reason I prefer Rogers is the growing importance of its sports and media business. In the latest quarter, its media revenue jumped 53% YoY to about $1.2 billion, helped by the consolidation of Maple Leaf Sports & Entertainment. Rogers has also agreed to acquire the remaining 25% interest in Maple Leaf Sports & Entertainment for roughly $4.4 billion. After the deal closes, the company intends to pursue a minority sale of its consolidated sports and media holdings.
Telus and BCE stocks
In 2026, Rogers stock looks even more appealing when I compare it with Telus and BCE.
Recently, Telus reset its quarterly dividend by 55% as it shifts more cash toward debt reduction. Its second-quarter service revenue declined 1% YoY, while adjusted EBITDA fell 2% to $1.8 billion. In addition, Telus also reduced its full-year outlook, which makes its higher yield less compelling to me.
While BCE looks more stable by comparison, I would still choose Rogers if I had to put fresh money into one of these three stocks today. In the June quarter, BCE managed to post a 1.5% YoY rise in its operating revenue, while its adjusted EBITDA rose 1% to $2.7 billion. However, the company’s free cash flow still declined 9.5% to about $1 billion as capital expenditures surged nearly 42% from a year ago.
Foolish takeaway
While BCE and Telus both offer higher yields today, Rogers gives me the balance I prefer. Improving free cash flow, declining capital intensity, steadier operating momentum, and potential value creation from its sports assets make it the telecom dividend stock I would pick from these three today.
