The truth for traders top-tier dividend shares proper now could be that there’s a large variance within the high quality of such names out there.
As soon as a prime dividend inventory I touted as price shopping for for the long-haul, Telus (TSX:T) has since fallen from grace.
Certainly, the chart above highlights the troubles this title has seen of late.
Right here’s why I believe Fortis (TSX:FTS) might be the significantly better decide for long-term traders.
Certainly, Fortis stays a prime dividend title I’m extremely bullish on for the approaching a long time, and there are many the explanation why.
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The bear case on Telus
Telus’s sky-high yield seems to be tempting, however the fundamentals scream warning, whereas Fortis delivers security and development you may financial institution on.
Telus boasts a whopping 9% dividend yield, however that’s no cut price. Certainly, I believe this yield is definitely a purple flag from plunging inventory costs amid stability sheet woes. The corporate’s payout ratio exceeds 100%, hitting 148% in current quarters. What this implies in layman’s phrases is that the corporate can’t cowl dividends from earnings alone and is dipping into its stability sheet.
Telus’ administration groups has paused dividend development to focus on a 75% free money stream payout, with internet debt-to-EBITDA at 3.5 occasions (aiming for 3.3x by end-2026). To me, this alerts excessive leverage dangers in a telecom sector going through competitors and capex for the AI and 5G buildouts. With This fall 2025 earnings lacking estimates (EPS $0.20 vs. $0.25) and revenues down 2% year-over-year, that’s hardly the soundness dividend hunters crave.
I believe a dividend lower is within the playing cards for Telus, significantly if the corporate’s deleveraging efforts fail. It is a dividend title I’d be very cautious round proper now, given how the corporate’s fundamentals have shifted.
The bull case on Fortis
Fortis, the utility powerhouse I proceed to pound the desk on, gives a sustainable 3.3% yield backed by a wholesome 73% payout ratio. That’s necessary to notice in relation to Telus, as Fortis’ dividend is well-covered by earnings. With a sturdy money stream mannequin pushed by regulated utility contracts with business and residential payers, this can be a inventory that ought to profit from continued inhabitants development in addition to surging demand from rising electrical energy utilization tied to AI and different technological developments.
Maybe essentially the most notable motive why I proceed to bang the desk on Fortis, nonetheless, is the corporate’s monitor report of elevating its dividend for 52 straight years. Over the course of this time, dividend development has remained within the mid-single-digits. And over time, it’s anticipated that Fortis will proceed to supply 4–6% annual dividend development guided by way of 2030. That’s one thing to jot down dwelling about.
This dividend development is predicted to be fueled by 7% fee base growth from $5.6B in 2025 capex. The corporate’s adjusted EPS rose to $3.53 in 2025 from $3.28, with This fall internet earnings up regardless of one-offs. This showcases the power of its regulated money flows, which have the potential to shrug off financial storms.
For these considering long run, there are few higher dividend shares out there to select from proper now. That’s a actuality, in my opinion.