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The Vancouver headquarters of Telus Corp., which on Wednesday said it would deviate from its previous plan to continue raising its dividend payout.DARRYL DYCK/The Canadian Press
Telus Inc. T-T is pausing its dividend growth until its “share price reflects growth prospects,” the company said in a release Wednesday morning.
The company’s stock price was trading at $18.27 on the Toronto Stock Exchange as of market close on Tuesday, down 6.9 per cent year-to-date and 17 per cent from this time last year, on concerns about the company’s debt load.
The pause is a divergence from Telus’s previous plan to continue mounting the dividend payout but at a slower rate. In May, the company reduced its dividend growth target to between 3-per-cent and 8-per-cent growth annually from 2026 to 2028.
Now, the company will continue to pay its quarterly dividend at the most recent level of $0.41 per share, “until such time as our share price and associated dividend yield better reflects the considerable growth prospects of Telus,” said chief executive officer Darren Entwistle, in the release.
Pausing dividend growth will help Telus reach its leverage goals of three times net-debt-to-earnings before interest, taxes, depreciation and amortization by the end of 2027, the company said. Telus had $25.7-billion in long-term debt as of Sept. 30.
The move comes after suggestions from some analysts that the telecom company’s dividend payout growth plan was unsustainable.
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In a recent interview, Telus chief financial officer Doug French said the company expects to end 2025 with a cash-flow payout ratio of about 75 per cent, and to remain close to that ratio in the coming years.
However, analysts from J.P. Morgan and Veritas Investment Research calculated the figures differently, saying they viewed that ratio as remaining above 100 per cent for the next few years.
In a note to investors Wednesday morning, CIBC director of institutional equity sales Veleyny Saavedra said the move “should act as a clearing event for the market,” and would position the company well for long-term value creation.
“We see them as incrementally positive and expect the Street to react favorably,” she said.
This is the second telecom company to attract attention this year because of its dividend. In May, BCE halved its dividend payout – which at the time had a yield of 13 per cent, widely seen as unsustainable – in order to allocate that cash elsewhere.
