TELUS Sets Sights on Double-Digit Free Cash Flow Growth Through 2028

10% Annual Free Cash Flow Growth Target Underscores Financial Momentum

TELUS Corporation is raising the bar for long-term value creation, outlining a new three-year free cash flow growth target of at least 10% compounded annually through 2028. With a 2025 baseline free cash flow projection of approximately $2.15 billion, TELUS expects this figure to reach around $2.4 billion in 2026—supported by solid operational performance and disciplined capital spending.

This upward trajectory highlights the company’s confidence in its business fundamentals. In parallel, TELUS plans to keep annual capital expenditures around $2.3 billion in 2026, reinforcing its commitment to growth while preserving balance sheet strength.

Dividend Growth Paused, Focus Shifts to Dividend Sustainability

While TELUS remains committed to rewarding shareholders, the company announced a pause in dividend growth until its share price and yield better align with the underlying growth prospects. Quarterly dividends will continue at the current level of $0.4184 per share, with coverage expected at approximately 75% of free cash flow over the next three years. This measured approach helps reinforce financial flexibility and ensures dividends remain well-supported by operations.

Phasing Out the Discounted DRIP to Strengthen Capital Allocation

TELUS is set to systematically reduce its Discounted Dividend Reinvestment Plan (DRIP) starting in early 2026, phasing out the discount from the current 2% to 0% by 2028. The plan is detailed below:

This move follows the successful conclusion of a heavy investment cycle and reflects TELUS’ desire to optimize its capital structure while supporting a strong balance sheet.

Deleveraging on Track with Strategic Partnerships and Asset Sales

Continuing a clear focus on debt reduction, TELUS reported an improved net debt to EBITDA leverage ratio of 3.5x as of September 2025. Management anticipates further progress, projecting the ratio to decline to about 3.3x by the end of 2026, and targeting 3x by the end of 2027. These improvements are attributed to strategic partnerships, hybrid note issuances, non-core asset sales, and ongoing strong cash flow from TELUS Digital.

Key Takeaways: Sustainability and Long-Term Value

Investors looking at TELUS today are witnessing a telecom leader shifting from an investment-heavy phase to a focus on cash generation, disciplined dividend policy, and balance sheet strength. The pause in dividend growth might disappoint some income investors, but it signals a company laying the groundwork for sustained shareholder returns over the long haul. For those interested in a robust, cash-flow-driven narrative, TELUS’ strategy—and the clarity of its targets—may warrant a closer look as 2026 approaches.

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