Still, the top dividend stock announced this week that it would pause dividend growth and instead focus more on business growth. So let’s take a look at what happened and what investors need to know about Dividend Knight.
A dividend knight
Telus has grown; there are no two ways about it. The expansion of the fiber optic network, the transition to digital healthcare and agricultural data platforms provide a diversified revenue base that goes far beyond the traditional telecom sector. This diversification has made Telus unique among the Big Three. Instead of managing pure telecom operations, Telus has built additional growth engines that reduce risks and increase long-term opportunities. This foundation is a big part of why investors have historically viewed Telus stock as a reliable “buy-and-hold forever” dividend stock.
Telus has reinforced this perception for years through its well-known dividend growth program. The company increased its dividend semi-annually, targeted an annual payout increase of 7% to 10% and consistently delivered it. However, the telecom company’s aggressive investment cycle in fiber-optic infrastructure and more than $4 billion in spectrum purchases placed a heavier balance sheet burden. Rising interest rates increased borrowing costs, and Telus Digital (TI) experienced weak sales that pressured profits.
In income
Telus’ latest financial update provides a clearer picture of a company transitioning from a heavy investment phase to a period of free cash flow (FCF) recovery. As of the third quarter of 2025, Telus had already reduced its leverage ratio to 3.5 times earnings before interest, taxes, depreciation and amortization (EBITDA), down from previous peaks. It expects a further improvement to 3.3 times by the end of 2026 and three times by 2027.
This is driven by several deliberate strategies: the Terrion partnership to unlock capital, issuing hybrid notes to diversify funding sources, selling non-core assets such as a large portion of the tower portfolio, and generating strong cash flow from Telus Digital’s transformation initiatives. The company reaffirmed its free cash flow target of $2.2 billion for 2025 and set a clear path forward. It expects compound annual growth in free cash flow of at least 10% between 2026 and 2028, with free cash flow expected to rise to approximately $2.4 billion in 2026.
Additionally, Telus stock is actively monetizing portions of its massive asset base to accelerate deleveraging. The broader business segments are stabilizing as the wireless price wars have cooled, average revenue per user is improving and customer churn is low thanks to continued investments in customer service. Taken together, the latest results show Telus shares entering a new operating phase aimed at harvesting cash flow, reducing debt burden and strengthening financial resilience.
What investors need to know
The most significant development for dividend investors is Telus’ decision to pause dividend growth, even as it maintains its current quarterly payout of $0.4184 per share. That’s an astonishing 9.2% return on writing. This pause is not a sign of financial weakness, but rather a strategic rebalancing of priorities. Management has been explicit. Dividend increases will only resume when the share price and dividend yield better reflect the company’s long-term growth potential. The company’s guidance targets 75% dividend coverage from future FCF, which is in line with the substantial FCF growth expected between 2026 and 2028.
The pause in dividend growth is also related to Telus Stock’s phased elimination of the Discounted Dividend Reinvestment Plan (DRIP). As Telus stock enters a period of rising free cash flow and reduced capital intensity, it no longer needs DRIP dilution to fund its dividend or ongoing investments. Meanwhile, the company is pursuing asset monetization, strategic partnerships and operational efficiencies to accelerate debt deleveraging.
In short
In short, Telus stock chooses discipline over optics and is keeping the dividend stable today to ensure it can grow sustainably in the future. But even now, you can still generate incredible income even with just $7,000.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| T | $18.79 | 372 | $1.67 | $621.24 | Quarterly | $6,994.68 |
For long-term investors, this measured approach strengthens the foundation under one of Canada’s most recognizable income stocks.
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