Valued at a market cap of $28.7 billion, Telus (TSX:T) is among the largest telecom companies in Canada. In 2025, Telus underperformed the broader market as investors were concerned about the company’s high debt levels amid elevated interest rates. Moreover, Telus announced that it would no longer increase its annual dividend and would deploy excess free cash flow to strengthen its balance sheet.
The pause on dividend growth did not impress investors, as the TSX tech stock had raised the annual payout from $0.20 per share in 2005 to $1.56 per share in 2024.
Today, Telus stock is down 46% from all-time highs, allowing you to buy the dip. So, let’s see if you should own this blue-chip dividend stock in January 2026.
Is Telus stock a buy, sell, or hold?
TELUS is making significant strategic shifts to strengthen its balance sheet and position itself for growth in emerging technology markets.
The Canadian telecommunications behemoth is targeting aggressive expansion of free cash flow over the next three years.
- In 2025, Telus aims to generate $2.15 billion in free cash flow (FCF).
- Given an annual dividend expense of $2.58 billion, the company’s payout ratio will exceed 100% this year.
- However, Telus expects to grow FCF by 10% annually through 2028, which indicates its FCF will be around $2.4 billion in 2026, $2.64 billion in 2027, and $2.90 billion in 2028.
- Management maintains confidence in these projections despite maintaining the quarterly dividend at $0.4184 per share.
Telus is systematically reducing its discounted dividend reinvestment plan from the current 2% discount to 1.75% in early 2026, then to 0% by 2028. This move, combined with strong cash generation, supports the company’s deleveraging target of reaching a 3.0 times net debt-to-EBITDA (earnings before interest, tax, depreciation, and amortization) ratio by year-end 2027, down from 3.5 times as of September 2025.
Operationally, Telus delivered solid third-quarter results, with 288,000 total mobile and fixed customer additions, reflecting 5% year-over-year growth to nearly 21 million connections.
The company maintained industry-leading postpaid mobile churn at 0.91%, marking the 12th consecutive year below 1%. Wireless average revenue per user continues to improve sequentially, falling 2.8% compared to the steeper declines in prior quarters, suggesting that the backbook repricing headwind is gradually easing.
Telus is enhancing its artificial intelligence capabilities and expects AI-enabled sales to increase from $800 million in 2025 to $2 billion in 2028, indicating an annual growth of over 30%.
The company also launched Canada’s first sovereign AI factory and became NVIDIA’s first official North American cloud partner. This positions Telus to capitalize on enterprise and government demand for secure, Canadian-hosted AI compute solutions.
The recently completed TELUS Digital privatization is expected to generate $150 million to $200 million in annual synergies, with $150 million realized within 2026.
What is the Telus stock price target?
Management is optimistic about monetization opportunities through potential partnerships in Telus Health, a business valued at over $5 billion. Finally, it estimates the sale of real estate and copper assets to accelerate deleveraging efforts while maintaining capital expenditures at around 10% of revenue.
Due to the ongoing drawdown, Telus stock offers shareholders a dividend yield of over 9%. Analysts remain bullish, forecasting the TSX tech stock to gain almost 18% given consensus price targets.
