Canadian income investors have had a rough ride over the last 18 months. BCE (TSX: BCE) slashed its dividend by more than half in May 2025, and Telus (TSX: T) returned the favour in July 2026.
Despite the dividend cut, both TSX tech stocks offer shareholders an attractive yield in November 2026. At the time of writing, BCE offers a yield of 5.8%, while for Telus it is marginally higher at 6%.
Let’s see which telecom giant has a better dividend outlook following Q3 results.
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Why BCE and Telus cut their dividends?
Telus and BCE were forced to cut their dividends due to elevated debt levels and rising interest payments. At the end of Q3, BCE reported a leverage ratio of 3.7 times, while the metric for Telus was similar at 3.6 times.
BCE aims to lower the leverage ratio to 3.5 times by the end of 2027, while the target for Telus is far more ambitious at three times or lower by the end of 2028.
BCE cut its annual payout from $3.99 to $1.75 per share, and Telus lowered its annual dividend from $1.67 to $0.75.
On the November 6 call, Telus CEO Victor Dodig explained:
“These decisions were difficult, but they were necessary.”
BCE Q3 results: A covered dividend with a thin cushion
In Q3, BCE’s revenue rose 2.2% while adjusted EBITDA earnings before interest, taxes, depreciation, and amortization) rose 0.9%. If we adjust for the Ziply Fiber acquisition, the U.S. business BCE acquired last year, EBITDA was flat.
BCE’s postpaid churn improved to 1.1%, which is the lowest Q3 reading in four years.
BCE forecasts free cash flow between $2.1 billion and $2.3 billion in 2026. Comparatively, its dividend expense is around $1.6 billion, which translates to a payout ratio of 75% at the midpoint FCF estimate. It is well above BCE’s payout target of 40% to 55%.
The Saskatchewan AI data centre could weigh heavily on BCE’s dividend payout ratio, which is already elevated.
Capital spending is rising because BCE is building both the Saskatchewan AI data centre and Ziply’s U.S. fibre network. CEO Mirko Bibic says Bell AI Fabric, the data centre business, is on track to be an over $500 million EBITDA business based on contracts signed so far.
Telus Q3 results: A smaller dividend, but shrinking cash flow
In Q3 2026, Telus reported free cash flow of $396 million, down 35% year over year. Its adjusted EBITDA fell by 5% to $1.8 billion, while adjusted earnings per share slid from $0.24 to $0.16. Telus also booked an $800 million noncash write-down on its Health unit.
The annual dividend expense for Telus is around $1.2 billion, while it forecasts free cash flow at $1.8 billion this year, indicating a payout ratio of 65% but higher than its target of 45% to 60%.
Telus targets $900 million in annual cash savings by the end of 2028, and management has also pointed to free cash flow growth of at least 10% a year in 2027 and 2028.
Which telecom dividend stock is a better buy today?
Telus has the edge on coverage today. Its payout for the Canadian dividend stock sits about five points above its target, while BCE’s sits 16 points higher. However, the growth estimates for BCE are far more attractive.
Analysts forecast free cash flow for Telus to increase from $1.8 billion in 2026 to $2.4 billion in 2028. If Telus stock is priced at 10 times forward FCF, it could return around 29% over the next 12 months, after adjusting for dividends.
Analysts forecast free cash flow for BCE to increase from $2.1 billion in 2026 to $3.9 billion in 2028. If BCE stock is priced at 10 times forward FCF, it could return around 40% over the next 12 months, after adjusting for dividends.
