TELUS sets 10% free cash flow growth target through 2028

TELUS Corporation (NYSE: TU) announced a three-year free cash flow growth target and changes to its dividend policy. The Canadian telecommunications company expects to grow free cash flow at a minimum 10% compounded annual growth rate from 2026 through 2028.

The company projects approximately $2.15 billion in free cash flow for 2025, with a preliminary target of $2.4 billion for 2026. Capital expenditure for 2026 is targeted at approximately $2.3 billion.

TELUS will pause dividend growth while maintaining its quarterly dividend at $0.4184 per share. The company plans to systematically reduce its Discounted Dividend Reinvestment Plan (DRIP) beginning in early 2026. The current 2% discount will decrease to 1.75% for dividends declared in February and May 2026, then to 1.5% in August and November 2026, 1% in 2027, and zero discount starting in 2028.

"Our confidence in delivering free cash flow growth at a minimum 10 per cent compounded annual growth rate through 2028 reflects our strong financial momentum," said Darren Entwistle, President and CEO of TELUS. "We will, however, moderate our dividend growth model of 3 to 8 per cent according to our dividend yield, including pausing our dividend growth until such time as our share price and associated dividend yield better reflects the considerable growth prospects of TELUS."

The company aims to reduce its net debt to EBITDA leverage ratio to approximately 3-times by the end of 2027. As of September 30, 2025, the leverage ratio improved to 3.5-times, with expectations to reach approximately 3.3-times by the end of 2026.

TELUS is pursuing opportunities including a strategic partner for TELUS Health and monetization of real estate and copper assets. The company's free cash flow projections translate to a cash dividend coverage ratio of approximately 75% of free cash flow for each of the three years from 2026 to 2028.

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