Why I’d Invest $10,000 in This Undervalued Dividend-Growth Stock for Decades of Income

Investing in high-quality dividend stocks offering high yields and well-protected payouts can help generate decades of worry-free income. One should focus on fundamentally strong companies with the ability to deliver profitable growth and enhance shareholder value to generate regular income regardless of where the market moves.

In this context, Telus (TSX:T) stands out for its high yield, resilient dividend payment, and growth history. The stock is undervalued near its current levels, supporting its bull case. Let’s explore why allocating $10,000 toward this undervalued dividend-growth stock could be a smart move for securing reliable income over the coming decades.

Telus stock is a reliable dividend-growth investment

Telus is a reliable stock for investors seeking stocks that can grow their dividends. Notably, it has been consistently rewarding shareholders through its multi-year dividend-growth program. The communication giant targets semi-annual dividend increases, with annual growth in the range of 7-10%. This steady growth is supported by a sustainable dividend payout ratio of 60-75% of its free cash flow, ensuring long-term stability.

In 2024, Telus declared dividends totalling $1.56 per share, reflecting a solid 7% increase from the previous year. The momentum continued into 2025, with the company announcing another 7% boost to its quarterly dividend, raising it to $0.4023 per share on February 12.

Long-term investors have benefited significantly from Telus’s commitment to returning capital. Since 2004, the company has distributed over $27 billion to shareholders, including more than $22 billion in dividends and $5.2 billion in share repurchases.

While Telus rewards its shareholders with higher dividend payments, it currently offers a high yield of over 8%. Moreover, the company remains on track to enhance shareholder value through higher payouts in the coming years.

Telus’s solid fundamentals to support its dividend payouts

Telus’s high-quality asset portfolio, growing customer base, and cost efficiency position it well to deliver strong, profitable growth, supporting its payouts. Moreover, Telus’s focus is on margin accretive customer expansion, low churn, and leading broadband networks augur well for growth.

Telus has surpassed one million mobility and fixed customer additions for the third consecutive year, reporting over 1.2 million new telecom subscribers in 2024. This remarkable growth is a direct result of its attractive bundled services, offering solid connectivity across mobile and home solutions. Moreover, customer loyalty remains a key strength for Telus, with postpaid mobile phone churn holding steady at just 0.99%, marking the 11th straight year below the 1% threshold.

Telus’s long-term investments in its broadband network continue to pay off. The company’s fibre and wireless assets support its operational and financial performance. These infrastructure investments enhance customer experience and drive strong free cash flow, enabling the company to reinvest in growth initiatives and return capital to shareholders.

Additionally, Telus remains committed to strengthening its balance sheet. By focusing on debt reduction, the company will have more financial flexibility, which bodes well for future dividend increases.

In summary, Telus is well-positioned to deliver profitable growth and reward its shareholders with higher dividend payments despite a challenging competitive and macroeconomic environment. The table shows that investing $10,000 in Telus stock can help you earn over $200.60 in dividend income quarterly.