Quick Read
- Telus paused its dividend growth in December 2025, holding the payout at C$0.4184 per share.
- The company set a C$2.4 billion free cash flow target for 2026 and aims for 10%+ annual growth through 2028.
- Shares are near 52-week lows, with a dividend yield around 9%.
- Telus plans to reduce net debt/EBITDA to 3.0× by 2027 through asset sales and stronger digital cash generation.
- Analysts are split: Canadian coverage is moderately bullish, while U.S. analysts remain cautious.
- Dividend growth paused: Telus will keep its quarterly dividend at C$0.4184 per share, halting future increases amid payout ratio concerns.
- Ambitious free cash flow (FCF) targets: Management sets a C$2.4 billion FCF target for 2026 and guides to 10%+ annual growth through 2028.
- Shares near 52-week lows: TSX: T and NYSE: TU both trade at depressed levels, offering a dividend yield near 9%—one of the highest among Canadian telecoms.
- Deleveraging plan: Telus aims to reduce net debt/EBITDA from 3.5× to 3.0× by 2027, supported by asset sales and strong cash generation.
- Growth bets: Focus on AI, cybersecurity, fibre and digital services to drive future revenue and margins.
Telus Dividend Pause: What Changed in December 2025?
Telus Corporation (TSX:T, NYSE:TU) caught investors off guard on December 3, 2025 by announcing a formal pause to its long-standing dividend growth program. The quarterly payout remains at C$0.4184 per share, but management made it clear: no further increases until the market properly re-rates the stock and the dividend yield better reflects Telus’ growth prospects. This decision comes as Telus shares trade near their lowest levels in a year, with yields hovering around 9%—a figure that would typically draw income investors, but now signals caution in the face of balance sheet stress.
Why the sudden shift? For years, Telus promoted a multi-year dividend growth plan, aiming for 3–8% annual increases and a payout ratio of 60–75% of free cash flow. But recent warnings from independent analysts, like Veritas, flagged that Telus’ dividend outlays were running well above cash generation—140% of adjusted FCF in 2024, and potentially 148% in 2025. J.P. Morgan’s November downgrade, citing unsustainable dividend growth due to leverage, further pressured sentiment. Telus’ move is a direct response: keep the payout stable, slow dilution from the Dividend Reinvestment Plan, and pivot focus to strengthening cash flow and the balance sheet.
Free Cash Flow and Deleveraging: The New Story
Telus is betting big on free cash flow (FCF) as its new narrative. The company reaffirmed its expectation of about C$2.15 billion in FCF for 2025, then set a target of C$2.4 billion for 2026, with guidance for at least 10% compounded annual growth through 2028. Capital expenditures remain substantial (about C$2.3 billion in 2026) as Telus continues investing in fibre, 5G, and digital infrastructure, but the pace is moderating. The discounted DRIP is being phased out, with the discount dropping from 2% in 2025 to zero by 2028, aiming to reduce shareholder dilution and cash outflow.
On the balance sheet, Telus targets net debt/EBITDA of ~3.3× by end-2026 and ~3.0× by 2027—down from 3.5× at September 2025. This will be achieved through a mix of asset monetization (notably towers via the Terrion partnership with La Caisse), future hybrid note offerings, non-core asset sales, and stronger cash generation from Telus Digital following its full acquisition.
Telus Stock Price, Yield, and Analyst Perspectives
As of December 3, 2025, Telus shares closed at C$18.72 (TSX) and US$13.4 (NYSE), both scraping 52-week lows. The forward dividend yield is in the high 8% to 9.2% range, per Barchart and MarketBeat. This high yield reflects the market’s skepticism about Telus’ ability to sustain payouts and growth amid leverage concerns. On the Canadian side, analysts maintain a “Moderate Buy” consensus with an average 12-month price target of C$22.77—suggesting 22% upside if Telus hits its new FCF goals. U.S. analysts are more cautious, with a “Hold” rating and 36% implied upside to an average US$18.17 target.
Valuation models diverge sharply. Simply Wall St sees deep upside (DCF-based value of C$45.8 per share) if Telus delivers on long-term cash flow, but flags a premium P/E ratio (33.5× vs industry average 16.7×) and high leverage as risks. MarketBeat highlights debt-to-equity near 180% and liquidity ratios below 1—numbers that demand flawless execution on deleveraging and growth.
Growth Bets: AI, Cybersecurity, Fibre, and Digital
Despite the dividend pause, Telus is doubling down on growth areas beyond traditional telecom. The Sovereign AI Factory, Canada’s fastest supercomputer (ranked 78th globally), puts Telus in the spotlight for AI infrastructure. The company is also rolling out quantum-safe cybersecurity solutions and expanding its TELUS TV+ streaming aggregation platform, aiming to be a “super-aggregator” in the Canadian market. The full acquisition of Telus Digital (formerly TIXT) for US$539 million is expected to bring C$150 million in annual cash synergies and deepen Telus’ capabilities in AI, SaaS, and global digital transformation services.
Telus Health continues to shine, with 18% revenue growth and 24% adjusted EBITDA gains in Q3 2025, now serving over 160 million lives globally. These initiatives are central to Telus’ pitch for double-digit FCF growth and reduced capital intensity.
Bull vs Bear: Is Telus Stock a Bargain or a Value Trap?
The debate is fierce. Bulls point to Telus’ regulated business, low customer churn, robust subscriber growth, and exposure to high-growth adjacencies (health, AI, cybersecurity). The dividend yield is attractive, and if management delivers on FCF and deleveraging, analyst targets suggest meaningful upside. Long-term investors willing to tolerate volatility may see Telus as a high-yield, improving-cash-flow story.
Bears focus on high leverage, payout ratios above 100% of conservative FCF, thin liquidity, and execution risks—especially integrating Telus Digital, scaling AI/data-centre services, and delivering promised synergies. Slower revenue growth and modest net margins are red flags when set against premium valuation multiples. The dividend pause is interpreted by some as a warning sign, not just prudence.
What to Watch in 2026
For those tracking Telus, several milestones will be crucial:
- Free cash flow: Can Telus hit C$2.4 billion in 2026 and sustain 10%+ CAGR?
- Leverage: Will net debt/EBITDA fall toward targets, or stall?
- Dividend posture: Does the board maintain, resume growth, or reconsider payouts?
- Growth in health and digital: Are revenues and EBITDA strong enough to justify premium multiples?
- AI/data-centre monetization: Do initiatives translate into material revenue and margins?
- Macro factors: Higher interest rates could squeeze FCF and valuations across the telecom sector.
Institutional sentiment is mixed but active. 1832 Asset Management recently trimmed its stake by 1.5%, but Telus remains a significant holding. Other institutions have added modestly, reflecting a lack of consensus but ongoing engagement.
Ultimately, Telus is at a crossroads: the company is trading a faster dividend growth path for a multi-year FCF and deleveraging story, while maintaining one of the richest yields in the sector. The next year will test whether this bet pays off, or if Telus joins the ranks of telecoms that overpromised and underdelivered.
Telus’ 2025 pivot reflects an industry-wide reckoning with rising debt and shifting digital economics. If management delivers on free cash flow and digital growth, the current pessimism may prove short-lived. But for now, Telus is a high-yield stock balanced on a knife edge between value and risk—a story that will be defined by its execution in 2026.