Telecom shares are a gradual and dependable supply of dividend revenue for traders. Till one thing out of character occurs, like what occurred with BCE (TSX:BCE) inventory. An enormous dividend lower and plenty of weak quarters later, many traders are understandably cautious of BCE inventory.

If that’s you, overlook about BCE and think about Telus (TSX:T) as an alternative, a dividend inventory that’s yielding an unbelievable 7.58% and posting sturdy earnings and money flows.

Make no mistake, the telecom atmosphere has been tough for all within the trade, together with Telus. Within the final three years, BCE inventory has been halved.

In distinction, Telus inventory has declined 22% — it’s nonetheless quite a bit, however clearly a significantly better efficiency. So, what made the distinction, you may ask?

Properly, in a nutshell, it boils right down to the quantity of leverage that BCE held. In 2024, all telecom suppliers have been mandated to provide rivals entry to their important fibre networks for a payment. And this negatively affected all of them. As we speak, we’re seeing that this transfer has had the meant impact — extra competitors, extra choices for customers, and decrease costs.

This despatched BCE to the breaking level, as the corporate was saddled with an excessive amount of debt and curiosity funds that it couldn’t afford. Telus, nonetheless, fared significantly better. Let’s take a better have a look at Telus.

Telus shines

Telus has completed a nice job on this difficult atmosphere. In reality, Telus’s earnings per share (EPS) in 2024 truly elevated 9.5% to $1.04, and within the first six months of 2025, EPS solely declined 6%. In Telus’s most up-to-date quarter, the proof of the corporate’s sturdy future was on full show as the corporate continued to concentrate on diversifying its income base, cost-cutting, and development areas.

For instance, Telus Well being noticed its income and earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) develop very properly, up 16% and 29% respectively. Additionally, the corporate’s EBITDA margin elevated 180 foundation factors to 17.5%. Moreover, Telus’s free money movement elevated 11% to $535 million. This was pushed by greater EBITDA and decrease capital expenditures and curiosity expense.

Importantly, Telus can be specializing in asset monetization because it heads into the long run. An instance of that is the corporate’s current sale of a 49.9% curiosity in its wi-fi tower operator, Terrion. In keeping with Telus, the vast majority of the proceeds from the sale are for use to deleverage. In reality, the deal will cut back Telus’s web debt by greater than $1.25 billion.

What’s forward for Telus inventory?

Within the subsequent years, Telus’s purpose is to create worth by specializing in its development companies, reminiscent of Telus Well being, and to ship on the asset monetization alternatives. Because of this, administration expects to ship EBITDA development, secure capital expenditures and free money movement growth.

Extra particularly, Telus expects income development of 2-4% and EBITDA development of 3-5%, with free money movement of $2.15 billion. Additionally, Telus’s purpose is to have a web debt-to-EBITDA ratio of 3 times by 2027. It’s presently at 3.7 occasions.

The underside line

BCE inventory has been an actual nail-biter, with weak efficiency hitting traders exhausting. For worth traders who’ve the urge for food, it’d nonetheless be price contemplating. Nevertheless, for traders preferring much less stress and a clearer, much less dangerous path to development, Telus inventory could also be a better option.