Dividend stocks can support long-term wealth creation by combining regular income with the potential for capital appreciation. Reinvesting dividends can further enhance returns through compounding, while established dividend-paying businesses may provide greater portfolio stability during market volatility.
Against this backdrop, let’s compare Enbridge (TSX: ENB) and Telus (TSX: T) based on their business outlook, dividend history, yields, and growth prospects to determine which may offer better value for income-seeking investors over the next five years.
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Enbridge
Enbridge operates a diversified energy infrastructure business spanning midstream energy, regulated utilities, and renewable power. Its extensive portfolio of more than 200 income-generating assets provides multiple revenue sources, while regulated operations, long-term take-or-pay contracts, and inflation-linked earnings improve cash flow visibility and resilience across market cycles. This consistency reflects the company’s strong execution record, having met or exceeded its financial guidance for 19 consecutive years.
Enbridge’s strong operating track record has delivered impressive long-term shareholder returns, with total shareholder return reaching about 880% over the past 20 years, or an annualized return of 12.1%. The company has also paid dividends uninterruptedly since 1953 and increased its annual dividend for 31 consecutive years. Its current quarterly dividend of $0.97 per share offers an attractive forward yield of about 5.8%, appealing to income-seeking investors.
Rising energy demand
Meanwhile, rising oil and natural gas production and consumption across North America continue to support demand for Enbridge’s extensive infrastructure and services. To capitalize on these opportunities, the company is advancing a secured capital investment program of approximately $41 billion, with projects expected to come online through the end of the decade. These investments could support future growth in earnings and cash flow. Enbridge also plans to return approximately $40 billion to $45 billion to shareholders over the next five years through dividends and share repurchases.
From a valuation perspective, Enbridge trades at 1.9 times its next-12-month sales and 22.4 times its next-12-month earnings. These multiples appear reasonable given the company’s resilient business model, dependable cash flows, attractive dividend yield, and visible long-term growth opportunities. Let’s now turn our attention to Telus.
Telus
Telus is one of Canada’s three major telecommunications providers and has historically delivered consistent dividend growth. However, the company has faced mounting challenges in recent years, including intensifying competition, substantial capital requirements to expand its 5G and broadband infrastructure, elevated interest rates, and regulatory pressures. These headwinds weighed on its financial performance, prompting management to suspend dividend growth plans and cut the quarterly payout by about 55% in July. The reduction hurt Telus’s reputation as a reliable dividend-growth stock. Nevertheless, the company currently pays a quarterly dividend of $0.19 per share, offering an attractive yield of approximately 6.5%.
Despite these challenges, Telus continues to invest in its 5G and broadband networks, with its 5G coverage now reaching 92% of Canada’s population. The company plans to spend about $2.6 billion on capital expenditures this year to expand and strengthen its infrastructure. However, the near-term outlook remains subdued. Management expects revenue to grow by 0% to 2% in 2026, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) could decline by 2% to 4%. Telus nevertheless expects to generate about $1.8 billion in free cash flow this year.
Meanwhile, Telus is strengthening its balance sheet by leveraging organic free cash flow growth, lower capital intensity, savings from its dividend reset, and proceeds from non-core asset sales. Management expects leverage to decline sequentially in 2027 and 2028, with the net debt-to-adjusted EBITDA ratio falling below 3 times by the end of 2028. In addition, a growing customer base and strong subscriber retention provide stability to its core telecommunications business.
From a valuation perspective, Telus currently trades at about 0.9 times next-12-month sales and 15.4 times next-12-month earnings, which looks reasonably attractive. These multiples could appeal to long-term investors willing to tolerate near-term financial pressure while waiting for the company’s cash flow, balance sheet, and operating performance to improve.
Investors’ takeaway
Although Telus offers a higher dividend yield and trades at a more attractive valuation, I believe Enbridge is the better choice for income-seeking investors, given its resilient financial performance, predictable cash flows, and well-defined growth opportunities.
