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Key Points
Rogers pays $2 per share each year, which gives a 4.31% yield. However, the payout has not grown since 2019.
Q2 free cash flow rose 6% to about $1 billion, while spending fell 16%. Management says the lower spending level should last beyond 2026.
Watch ARPU trends and the planned minority stake sale in 2027, because debt paydown could lead to dividend hikes.
Picture a retiree sitting down with the monthly budget, which includes groceries, property tax, and utilities. You can cover a portion of these expenses with quality dividend stocks that offer an attractive yield.
One such Canadian dividend stock is Rogers Communications (TSX: RCI.B), which pays a yield of 4.3% in 2026. The company has absorbed a huge merger, trimmed its spending, and is poised to cash in on its sports empire.
So what does a retiree get for owning the TSX dividend stock today? The second quarter results offer some answers.
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Why Rogers Communications appeals to Canadian retirement income investors
Rogers runs three businesses. The wireless segment sells phone plans, its cable segment sells home internet, and Sports and Media owns the Toronto Blue Jays, the Rogers Centre and Sportsnet.
Rogers pays a dividend of $0.50 per share each quarter, or $2 per year. The annual payout has been maintained since 2019 but has risen from $0.50 per share in 2007.
The key metric to analyze whether the dividend payout is safe is free cash flow. Data compiled from TIKR shows that analysts forecast free cash flow to increase from $3.4 billion in 2025 to $5.2 billion in 2030.
Comparatively, the annual dividend expense is around $1.1 billion. The dividend payout ratio is less than 35%, which provides the company with enough room to lower balance sheet debt and target accretive acquisitions.
In Q2, Rogers reduced capital spending by 16% and increased free cash flow by 6% to $1 billion. Services sales grew 8% to $5.1 billion, and adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) rose 3% to $2.4 billion.
Capital intensity calculates how much of each revenue dollar goes back into the network. It dropped to 12.4%, the lowest level since the first quarter of 2008.
CEO Tony Staffieri plainly explained the progress on the call.
We are doing what we said we would do, and we’re doing it ahead of schedule.
CFO Glenn Brandt said management expects this lower spending level to continue beyond 2026.
However, there were certain headwinds for Rogers stock in the wireless segment.
The company added 40,000 wireless customers in Q2 while average revenue per user, known as ARPU, fell 2% to $54.25.
Postpaid phone churn, the share of customers who leave, improved to 0.94%, an improvement of six basis points year over year.
Staffieri also pointed to a recent umlaut ranking that named Rogers Canada’s best 5G+ network.
Staffieri said the company pulled back from deep promotional discounts because they were not sustainable. It now leans on perks, bundles and hardware deals largely funded by phone makers.
One watch item is the lower activation fees raised by analysts on the call. The management said the effect was minor in Q2 because the change came late in the quarter, which the company plans to offset with other fees and price moves.
How the MLSE deal and debt paydown could support the Rogers dividend
Rogers agreed to buy the remaining 25% of Maple Leaf Sports & Entertainment (MLSE) for $4.4 billion. The deal should close in the fourth quarter, pending league approvals.
Management plans to sell a minority stake in the combined sports and media business in the first half of 2027, the proceeds of which will lower balance sheet debt.
Leverage, which compares debt to earnings, improved to 3.8 times from 4 times at the end of 2025, while total liquidity sits above $6 billion.
Rogers has said it believes its combined sports and media assets could be worth $25 billion or more. On the Q2 call, Brandt said management still feels optimistic, but he added that the market will set the final price.
Rogers still carries meaningful debt, the ARPU is falling, and regulation has already pushed the company to rethink its spending. The sports stake sale also depends on league approvals and investor demand.
However, the Canadian tech stock is growing its free cash flow consistently while trading at a cheap valuation. If the dividend stock trades at 8 times forward FCF, below the 10-year average of 13.5 times, it could double within the next 30 months, after adjusting for dividends.
