Why Deutsche Telekom Outperforms T-Mobile as a Dividend-Generating Investment in 2025

In the competitive telecom sector, investors seeking dividend-driven returns must weigh immediate income potential against long-term stability. While T-Mobile US (TMUS) has shown aggressive growth in recent years, Deutsche Telekom AG (DTE.DE) emerges as a superior choice for 2025 due to its disciplined capital allocation, robust financial metrics, and sustainable dividend strategy.

Dividend Yield and Payout Ratio: A Clear Edge

Deutsche Telekom’s 2025 dividend yield of 2.88% dwarfs T-Mobile’s 1.4%, offering investors nearly double the income for the same investment [4]. This gap is supported by Deutsche Telekom’s payout ratio of 35%, which is not only lower than T-Mobile’s 33.21% but also leaves room for future increases [5]. The German telecom giant has even signaled plans to raise its payout ratio to 40-60% of adjusted earnings per share, a commitment to shareholder returns that contrasts with T-Mobile’s reliance on buybacks (which returned €3.5 billion in Q2 2025 alone) [2].

Financial Stability: Deutsche Telekom’s Strategic Resilience

While both companies carry high debt-to-equity ratios (2.14 for Deutsche Telekom and 1.98 for T-Mobile), Deutsche Telekom’s long-term financial strategy is more disciplined. Its Q2 2025 adjusted EBITDA after leases hit €11 billion, with full-year guidance raised to over €45 billion, reflecting strong operational leverage [2]. This contrasts with T-Mobile’s reliance on aggressive debt financing, which, while fueling growth, exposes it to interest rate risks.

Deutsche Telekom’s return on equity (ROE) of 13.26% in 2025 and ROA of 4.25% further underscore its efficiency in generating returns [3]. T-Mobile, by comparison, has an ROE of 4.81% and ROA of 1.4%, metrics that, while positive, lag behind industry averages [1]. These figures highlight Deutsche Telekom’s ability to convert equity and assets into profit, a critical factor for long-term stability.

Historical Dividend Growth: A Tale of Two Approaches

T-Mobile’s 68.70% average dividend growth rate over the past 12 months is impressive [1], but Deutsche Telekom’s 5-year growth rate of 2.90% (per GuruFocus) [1] suggests a more conservative, sustainable approach. While Digrin reports a -10.14% average growth for Deutsche Telekom’s past three years [4], this likely reflects a strategic pause to reinvest in fiber expansion in Germany and the U.S., a move that strengthens long-term value. T-Mobile’s rapid growth, meanwhile, may be harder to sustain given its higher debt load and industry competition.

Conclusion: A Balanced Approach for Dividend Investors

For investors prioritizing both income and stability, Deutsche Telekom’s combination of a higher yield, disciplined payout strategy, and strong ROE makes it the superior choice in 2025. While T-Mobile’s aggressive buybacks and dividend growth are enticing, they come with elevated debt risks and less room for margin expansion. Deutsche Telekom’s focus on fiber infrastructure and shareholder returns—backed by a €2 billion buyback program—positions it as a telecom leader with enduring value.

**Source:[1] What Analysts Are Saying About T-Mobile US Stock [https://www.nasdaq.com/articles/what-analysts-are-saying-about-t-mobile-us-stock][2] Deutsche Telekom's Q2 2025 Earnings: A Strategic Powerhouse [https://www.ainvest.com/news/deutsche-telekom-q2-2025-earnings-strategic-powerhouse-expanding-margins-global-leadership-2508][3] Deutsche Telekom (ETR:DTE) Statistics & Valuation [https://stockanalysis.com/quote/etr/DTE/statistics/][4] DTE.DE vs. TMUS — Stock Comparison Tool [https://portfolioslab.com/tools/stock-comparison/DTE.DE/TMUS]