When a dividend stock starts sliding, it’s easy to think something must be wrong. And when that dividend stock is a household name, it can be even harder to pull the trigger and buy. But sometimes, the best opportunities come from exactly those moments, when a giant stumbles and investors give up. That’s why TELUS (TSX:T) is my ultimate contrarian investment right now.
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Recent market moves
TELUS stock has had a rough ride. It’s down over 35% from its 2022 highs, making it one of the worst-performing major telecom stocks on the TSX in recent years. The market’s main concerns? Slowing subscriber growth, rising debt costs, and a dividend that some fear may be at risk if the pressure continues. And in fairness, these aren’t minor issues. But that’s exactly why this dividend stock stands out. Everyone seems focused on what could go wrong. Meanwhile, there’s a strong case for what could go right.
TELUS stock recently reported its first quarter 2025 earnings, which weren’t flashy but were far from disastrous. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose, as well as revenue. Free cash flow also climbed an incredible 22%, with the company reaffirming its 2025 financial targets.
More to come
That last point matters. TELUS stock isn’t just a telecom anymore. The company has spent years building up Telus Health, a tech-driven platform that now reaches more than 60 million lives across North America. This segment continues to post double-digit growth, and it’s giving Telus something the other telecoms don’t have: a real growth engine outside of data plans and cell towers. That kind of diversification may be what sets the company up for a long-term rebound.
There’s also the dividend. TELUS stock pays out $1.67 per share annually, which gives it a yield north of 7.4% at recent prices. That’s one of the highest yields on the TSX for a blue-chip stock. Critics have warned that the payout may be unsustainable given cash flow pressures. But management continues to reaffirm its dividend policy. With capital expenditures expected to decrease following years of heavy network investment, dividend coverage should improve going forward.
Considerations
Debt is definitely something to monitor. TELUS stock carries some debt, and interest payments have risen. But it’s worth noting that the company staggered its maturities to avoid a refinancing cliff. And with long-term assets like its fibre network and wireless spectrum, Telus has a strong base to generate reliable earnings, even in tougher conditions.
The bottom line? Telus is still a massive player with millions of loyal subscribers, a growing health business, and high recurring revenue. It’s facing headwinds, no question. But the market seems to have priced in a worst-case scenario. That’s what makes this a contrarian opportunity.
Buying beaten-down giants isn’t always glamorous. You won’t impress anyone at a dinner party by saying you bought Telus. But over time, investing is more about logic than popularity. And logic says that a stock with a 7.5% yield, stable revenue, and a growing tech division shouldn’t be trading at multi-year lows.
Bottom line
This isn’t a short-term trade. It’s a long-term bet that TELUS stock will do what it has done for decades: adapt, stabilize, and grow. And while others are too busy worrying about yesterday’s problems, contrarians have a chance to get in at a bargain. For me, that makes Telus one of the best buys on the TSX today.
