Beyond Telus: A High-Yield Stock Perfect for Income Lovers

TELUS (TSX:T) has had a rough stretch, and that is exactly why income investors keep circling it. The stock has fallen hard from its old highs as investors worried about debt, pricing pressure, and whether its generous dividend had become a little too generous. But the company has not stood still. Over the last year, it kept adding customers, pushed free cash flow higher, monetized assets, and leaned harder into health and digital growth. But is it enough when compared to a high yielder?

T

TELUS stock is still, at heart, one of Canada’s biggest telecom players. It sells wireless, internet, TV, security, and business services, but it also has a growing health platform that gives it more than the usual telecom story. Yet the business kept growing where it counts. In the fourth quarter of 2025, TELUS stock reported 377,000 mobile and fixed customer net additions, including 50,000 mobile phone additions and 35,000 internet additions. For the full year, it topped one million combined mobility and fixed customer additions for the fourth straight year.

Furthermore, TELUS stock posted fourth-quarter 2025 revenue of $5.3 billion, while full-year free cash flow reached a record $2.2 billion, up 11%. Full-year basic earnings per share (EPS) rose 9%, and management laid out a 2026 free cash flow target of roughly $2.45 billion with capital spending set to fall by about 10% to $2.3 billion. TELUS stock also offers a forward dividend yield of roughly 9.2%, though the trailing payout ratio remains high, so this is not a zero-risk income name.

Valuation helps the case. TELUS stock trades at about 25 times trailing earnings, which is not a bargain-basement multiple, but the market is really pricing it more on dividend durability and balance-sheet repair than on simple earnings. Over the last year, management announced the Terrion tower deal with La Caisse for $1.26 billion and continued its copper and real estate monetization efforts to reduce leverage. Net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) ended 2025 at 3.4 times, with management targeting 3.3 times or lower by the end of 2026. So, yes, TELUS stock still works for income lovers, but it now looks more like a recovery yield play than an easy sleep-at-night stock.

FRU

That is where Freehold Royalties (TSX:FRU) starts to look especially attractive. Freehold is not an operator drilling wells and spending heavily on equipment, but a royalty company. It owns mineral titles and royalties on oil and gas properties across North America, which means it collects income while avoiding most of the capital and operating costs that crush producers when markets turn ugly.

In 2025, Freehold delivered average production of 16,294 barrels of oil equivalent per day (boe/d), up 9% from 2024, with oil and natural gas liquids production up 12%. Its U.S. exposure has also become a bigger piece of the story, helped by the strategic Midland Basin acquisition announced in late 2024 and closed in December. That helped make the portfolio more oil-weighted and more geographically diversified. By 2025, about 45% of production came from the U.S., contributing 53% of revenue.

Income is the main event, and Freehold still delivers. It pays a monthly dividend of $0.09 per share, or $1.08 annually, and management says that base dividend is fully funded even at low commodity prices around US$50 WTI. Based on recent pricing, the yield sits around 6%. The stock trades at roughly 32 times trailing earnings, which looks rich at first glance, but royalty companies are usually judged more on funds from operations, margin quality, and payout resilience than plain earnings.

Bottom line

TELUS stock still has appeal for investors who want a huge yield and believe the turnaround keeps gaining traction. But if the goal is high income with a cleaner business model and a little less balance-sheet strain, Freehold Royalties looks like the more tempting choice right now. Here’s what both could earn from $7,000.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDTOTAL ANNUAL PAYOUTPAYOUT FREQUENCYT$17.83392$1.67$654.64QuarterlyFRU$17.88391$1.08$422.28Monthly

TELUS stock may still win back the market. Freehold just looks like it needs to do less work to keep income investors happy.

The post Beyond Telus: A High-Yield Stock Perfect for Income Lovers appeared first on The Motley Fool Canada.

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More reading

• 2 Value Stocks With Dividend Yields Over 6.5% to Buy Near 52-Week Lows
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Freehold Royalties and TELUS. The Motley Fool has a disclosure policy.