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Telus (TSX:T) has spent a long time constructing its fame as one in every of Canada’s most dependable dividend shares, supported by a enterprise mannequin rooted in important providers that Canadians use each single day. T inventory generates a steady movement of recurring income that hardly ever declines even throughout financial slowdowns.

But this week, the highest dividend inventory introduced it might be pausing dividend progress and focusing extra on enterprise progress as a substitute. So let’s take a look at what occurred, and what buyers have to learn about this as soon as Dividend Knight.

A dividend knight

Telus has been rising; there’s no two methods about it. Its fibre community buildout, its push into digital healthcare, and its agricultural knowledge platforms give it a diversified earnings base that goes far past conventional telecom. This diversification has made Telus distinctive among the many Huge Three. Slightly than handle pure telecom operations, Telus has constructed extra progress engines that scale back threat and broaden long-term alternatives. That basis is an enormous a part of why buyers traditionally noticed Telus inventory as a reliable “buy-and-hold ceaselessly” dividend inventory.

For years, Telus enhanced this notion by means of its well-known dividend-growth program. The corporate raised its dividend semi-annually, focusing on 7% to 10% annual payout will increase and delivering them constantly. Nevertheless, the telco’s aggressive funding cycle in fibre infrastructure and greater than $4 billion in spectrum purchases created a heavier balance-sheet load. Rising rates of interest magnified funding prices, and Telus Digital (TI) skilled income softness that pressured earnings.

Into earnings

Telus’s newest monetary replace presents a clearer image of an organization transitioning from a heavy funding part to a interval of free money movement (FCF) restoration. As of Q3 2025, Telus had already diminished its leverage ratio to three.5 instances earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA), down from prior peaks. It expects additional enchancment to three.3 instances by the top of 2026, and three instances by 2027.

That is being pushed by a number of deliberate methods: the Terrion partnership to unlock capital, issuing hybrid notes to diversify funding sources, promoting non-core belongings like a significant portion of its tower portfolio, and producing sturdy money movement from Telus Digital’s transformation initiatives. The corporate reaffirmed its 2025 free money movement goal of $2.2 billion and laid out a transparent trajectory. It expects a minimal 10% compound annual free money movement progress fee from 2026 to 2028, with 2026 FCF anticipated to rise to roughly $2.4 billion.

Moreover, Telus inventory is actively monetizing items of its huge asset base to speed up deleveraging. Its broader enterprise segments are stabilizing as value wars in wi-fi have cooled, common income per consumer is enhancing, and churn is low because of ongoing customer-service investments. Taken collectively, the newest outcomes present Telus inventory coming into a brand new working part centered on harvesting money movement, decreasing leverage, and strengthening monetary resilience.

What buyers have to know

Essentially the most important improvement for dividend buyers is Telus inventory’s determination to pause dividend progress, even because it maintains its present quarterly payout of $0.4184 per share. That’s a tremendous 9.2% yield at writing. This pause isn’t an indication of monetary weak point, however somewhat a strategic rebalancing of priorities. Administration has been specific. Dividend will increase will resume solely when the share value and dividend yield higher replicate the corporate’s long-term progress potential. The corporate’s guideline targets 75% dividend protection from future FCF, which aligns with the substantial FCF progress anticipated from 2026 by means of 2028.

Pausing dividend progress additionally ties into Telus inventory’s phased elimination of its Discounted Dividend Reinvestment Plan (DRIP). As Telus inventory strikes right into a interval of rising free money movement and diminished capital depth, it now not wants DRIP dilution to fund its dividend or ongoing investments. In the meantime, the corporate is pursuing monetization of belongings, strategic partnerships, and operational efficiencies to speed up deleveraging.

Backside line

Briefly, Telus inventory is selecting self-discipline over optics, holding the dividend regular at present to make sure it could actually develop sustainably sooner or later. But even now, you possibly can nonetheless seize unbelievable revenue with even simply $7,000.

For long-term buyers, this measured method strengthens the inspiration beneath one in every of Canada’s most recognizable revenue shares.