Why I’d Choose This Dividend Stock Over Telus or BCE Any Day

Beyond just looking at company fundamentals, I think investors also need to pay attention to the broader macroeconomic backdrop when deciding which stocks to buy. Right now, I think the environment is becoming more of a headwind than a tailwind for Canadian telecom giants like TELUS (TSX:T) and BCE (TSX:BCE).

During the years immediately following COVID, both companies benefited heavily from surging immigration levels. International students, temporary foreign workers, and new permanent residents all needed cellphone plans, internet subscriptions, and bundled telecom services. Population growth became a major driver of subscriber growth.

That backdrop is now changing. Under Mark Carney’s new Liberal government, Canada has steadily reduced targets for temporary foreign workers and international students. Immigration growth is slowing, and I think that creates a meaningful challenge for telecom companies that had become increasingly reliant on population growth to drive top-line expansion.

Meanwhile, the setup for Canadian energy has improved considerably. With the U.S.-Israel versus Iran conflict now entering its third month and ongoing disruptions surrounding the Strait of Hormuz, global energy security is back in focus. Canadian producers are once again being viewed as a relatively stable and secure source of supply during a period of geopolitical turbulence.

So if I were investing in dividend stocks today, I would personally skip the telecoms and look toward PrairieSky Royalty (TSX:PSK) instead. The yield is lower at 3.2%, but I think there are several reasons why this may ultimately prove to be the more durable investment.

What is PrairieSky Royalty?

PrairieSky is not your typical oil and gas company. The business is not drilling wells, exploring for oil, or operating pipelines. Instead, PrairieSky owns mineral rights and royalty interests tied to energy-producing land across Canada.

Specifically, the company owns roughly 9.9 million acres of fee simple mineral title lands, along with another 8.7 million acres tied to gross overriding royalty interests. Gross overriding royalties essentially allow PrairieSky to collect a percentage of production revenue generated by other companies operating on its land.

That distinction is important because it removes many of the risks traditionally associated with energy investing. PrairieSky does not need to spend heavily drilling new wells or maintaining production infrastructure. It simply collects royalties when third-party operators successfully produce oil and gas from its lands.

Today, the company has more than 335 producing leases spanning over 30 geological horizons. That diversification gives PrairieSky exposure across multiple formations, operators, and commodity streams instead of relying on a single producing asset. This model creates a very different financial profile compared to the average TSX energy stock.

For example, PrairieSky currently generates a profit margin of roughly 45.3%, which is exceptionally high for the energy sector. Traditional producers cannot match this, because they have to deal with volatile operating costs, capital expenditures, transportation expenses, and debt servicing requirements that can heavily compress margins during weaker commodity cycles.

The dividend is conservative on purpose

One thing I actually like about PrairieSky is that management does not appear overly aggressive with the dividend. Oil and gas remains a cyclical business. During boom periods, many companies become tempted to dramatically raise payouts, only to slash them later once commodity prices weaken.

PrairieSky takes a more measured approach. The company currently pays an annualized dividend of $1.06 per share on a quarterly basis, which works out to a yield of roughly 3.15% at current prices. That yield is lower than what investors can get from some telecom or high-yield energy stocks today. But the tradeoff is that the payout appears substantially more sustainable.

As of Q1 2026, PrairieSky maintained a dividend payout ratio of roughly 65%. Management also highlights several structural advantages supporting the business, including no maintenance capital expenditures, no operating costs tied to production, and no abandonment or environmental liabilities.

The balance sheet also remains very strong, with debt sitting at just 0.6 times EBITDA over the trailing 12 months. For income investors, that combination of asset-light royalties, conservative payouts, and low leverage is hard to ignore.

The post Why I’d Choose This Dividend Stock Over Telus or BCE Any Day appeared first on The Motley Fool Canada.

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More reading

• How Splitting $30,000 Across Three TSX Stocks Could Generate $1,945 in Annual Dividends
• This TSX Dividend Stock is Down 24% and Worth Holding for Decades
• Here’s the Average TFSA and RRSP at Age 45
• What’s Going On With BCE’s Dividend?
• 1 Great Dividend I’d Buy Over Telus or BCE Stock Today

Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.