TELUS Corporation Boosts Dividend Amid Robust Growth, Reinforcing Its Dividend Champion Status

TELUS Corporation (TS.TO) has once again demonstrated its commitment to shareholder returns with the announcement of a 7% increase in its quarterly dividend, now set at CAD $0.4163 per share, payable on July 2, 2025. This marks the latest step in the telecom giant’s multi-year dividend growth program, which targets annual increases of 7–10% through 2025. With a record date of June 10, 2025, shareholders who own the stock by that date will receive the payout, while the ex-dividend date—the cutoff for eligibility—falls on June 9, 2025.

The Dividend Growth Story: Sustained by Strong Financials

TELUS’s dividend hike reflects its exceptional financial discipline and operational resilience. In 2024, the company reported a 12% year-over-year increase in free cash flow, reaching CAD $2.0 billion, with projections to hit CAD $2.15 billion in 2025. This cash flow growth, paired with a targeted net debt-to-EBITDA ratio of ~3x by 2027, underscores management’s confidence in maintaining its dividend trajectory.

The dividend increase also aligns with TELUS’s long-term strategy to return capital to shareholders while expanding its core businesses. For instance, its Technology Solutions (TTech) division saw Adjusted EBITDA margins rise to 38.2% in 2024, driven by cost efficiencies and gains in health and agriculture sectors. Meanwhile, customer growth remains robust: TELUS added 328,000 net customers in Q4 2024, including 70,000 mobile subscribers and 194,000 connected devices, extending its record of over 1.2 million annual net additions for the third consecutive year.

Why Investors Should Take Note

TELUS’s dividend policy stands out in an era of economic uncertainty. Unlike peers that have trimmed payouts during market volatility, TELUS has increased its dividend every year since 2010, making it a blue-chip favorite for income-focused investors. The 6.8% dividend yield (as of Q1 2025) is particularly compelling, especially when combined with the company’s low payout ratio—hovering around 60% of free cash flow, well within its 60–75% long-term target.

Moreover, TELUS’s dividend reinvestment program allows shareholders to compound returns by reinvesting dividends into additional shares, up to CAD $20,000 annually. This program, though set to phase out by 2027, has historically attracted long-term investors seeking steady income and capital appreciation.

Risks and Considerations

While TELUS’s dividend growth is enviable, investors should monitor two key areas. First, the company’s debt levels, though manageable, could face pressure if interest rates rise sharply. TELUS aims to keep its net debt-to-EBITDA ratio under 3x by 2027, which will require disciplined capital allocation. Second, the Canadian telecom sector remains fiercely competitive, with rivals like Rogers Communications (RCI.TO) and BCE (BCE.TO) also vying for market share. TELUS’s ability to sustain margin improvements in its health and technology divisions will be critical to maintaining free cash flow.

Conclusion: A Dividend Champion with Room to Grow

TELUS Corporation’s July 2025 dividend hike reinforces its status as a reliable income generator in an otherwise volatile market. Backed by strong free cash flow growth, disciplined debt management, and a customer base that continues to expand, TELUS is well-positioned to meet its 2025 dividend targets.

Crunching the numbers:
- Dividend Coverage: With an EBITDA of CAD $5.5 billion (projected 2025 growth of 5.5%), TELUS’s dividend cover (EBITDA-to-dividends ratio) remains robust at 2.0x, ensuring ample buffer for payouts.
- Growth Pipeline: The company’s 5G network expansion and health-tech ventures (e.g., TELUS Health) could unlock new revenue streams, further fueling dividend sustainability.
- Valuation: At a forward price-to-earnings ratio of 14.5x, TELUS trades at a discount to its five-year average, offering value to income investors.

For those seeking a defensive telecom stock with predictable dividends, TELUS remains a top pick. As CEO Darren Entwistle noted, the dividend growth program is “a testament to our ability to balance returns with investment in innovation.” In an era where dividends matter more than ever, TELUS is writing the playbook.