TELUS Corporation today announced a comprehensive shift in its capital allocation strategy. The company will maintain its current quarterly dividend of $0.4184 per share but will pause any dividend growth until the share price better reflects its long‑term growth prospects. In addition, TELUS will systematically reduce the discount on its Discounted Dividend Reinvestment Plan (DDRIP) beginning in 2026, moving from a 2 % discount to 1.75 % for dividends declared in February and May 2026, 1.5 % for dividends declared in August and November 2026, 1 % in 2027, and eliminating the discount entirely in 2028.
The dividend policy change is part of TELUS’s broader deleveraging plan, which targets a net debt to EBITDA ratio of roughly three‑times by the end of 2027. As of September 30 2025, the ratio stood at 3.5‑times, down from 4.5‑times, and management projects a further improvement to about 3.3‑times by the end of 2026. The reduction in leverage is driven by the successful Terrion partnership with La Caisse, closed on September 11 2025, a $1.5 billion hybrid notes offering in July 2025, and the divestiture of real‑estate and copper assets.
Free‑cash‑flow generation is a key pillar of the plan. TELUS set a free‑cash‑flow target of approximately $2.15 billion for 2025 and a preliminary target of $2.4 billion for 2026, with a minimum 10 % compound annual growth rate projected for 2026‑2028. These targets support the company’s ability to service debt, fund future AI and digital initiatives, and maintain a sustainable payout structure.
In its most recent earnings release, TELUS reported third‑quarter 2025 results that provide context for the capital‑allocation shift. Revenue rose to CAD 5,106 million, up 0.1 % from CAD 5,099 million a year earlier, while net income climbed to CAD 493 million from CAD 280 million. Basic earnings per share from continuing operations reached CAD 0.32, up from CAD 0.19. Adjusted EPS of $0.24 fell short of the consensus estimate of $0.26, and revenue of C$5.11 billion missed the consensus of C$5.17 billion. Management attributed the revenue miss to modest pricing pressure in legacy segments, while the earnings miss was largely due to higher operating costs in the core telecom services business.
Analysts at TD Securities, Scotiabank, and RBC Capital Markets welcomed the dividend pause and DDRIP reduction as a move toward fiscal discipline. They noted that the plan would strengthen TELUS’s balance sheet, improve leverage ratios, and provide the flexibility needed to invest in AI and digital services. The positive analyst sentiment reflects confidence that the company’s deleveraging trajectory and free‑cash‑flow targets will support long‑term shareholder value.
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