Thomson Reuters (TSX:TRI) has spent more than a century building one of the most defensible businesses in the world. It owns the legal research platform Westlaw, the leading tax calculation engines used by accountants worldwide, and a suite of AI-powered tools gaining real traction with professionals.
None of that has changed. But the TSX dividend stock is down over 60% from its peak.
The sell-off has been brutal and, according to Morningstar, largely unjustified. The research firm maintains its wide-moat rating on Thomson Reuters and calls the Canadian stock significantly undervalued at current levels.
That’s a strong statement, and there’s plenty of evidence to back it up.
Source: Getty Images
Why is the TSX dividend stock down 60%
The fear driving the sell-off has two main sources.
First, Anthropic, the company behind the Claude artificial intelligence model, released a legal plug-in in early February 2026 targeting in-house legal teams. The announcement sent Thomson Reuters shares down another 16% in a single session.
Second, the broader market has spent the past year worrying that AI will disrupt the professional information market entirely. That narrative has hung over the stock like a cloud since summer 2025.
Here’s what the market is missing.
The Claude plug-in targets tasks like contract reviews and legal briefings. As Morningstar noted, it has nothing to do with legal research, which is the core of what Thomson Reuters sells.
Westlaw’s deep, editorially enhanced legal content library, built over decades by thousands of attorney editors, is not something a general AI model can replicate. The stakes in legal work are too high. Attorneys need to be right, and they need sources they can trust.
CEO Steve Hasker made this point clearly during the company’s fourth-quarter 2025 earnings call. “Professional-grade results cannot be delivered without this content and expertise,” he said. “General purpose models cannot meet this standard.”
That same moat applies to the tax side as well. Thomson Reuters runs the tax calculation engines that accounting firms rely on twice a year, every year. Switching costs are enormous, and new entrants have not made inroads into that core market.
A strong Q4 performance
Here’s what makes this situation so unusual: the underlying business is actually performing well.
In Q4 2025, Thomson Reuters reported organic revenue growth of 7% for the total company and 9% for its three core segments, which include Legal, Corporates, and Tax, Audit and Accounting.
Full-year adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded 100 basis points to 39.2%. Free cash flow came in at US$1.95 billion, slightly ahead of expectations.
For 2026, management guided for organic revenue growth of 7.5% to 8%, with the core segments growing at approximately 9.5%. EBITDA margin is expected to expand another 100 basis points.
The company also committed to that same level of margin expansion in 2027 and 2028. Basically, Thomson Reuters is a business compounding steadily and predictably.
And then there’s the dividend. Thomson Reuters raised its annual payout by 10% to US$2.62 per share. Today, it offers shareholders a forward yield of 2.5%. Analysts forecast the dividend to increase to almost US$3 per share in 2028.
Management also noted it has roughly US$11 billion in capital capacity through 2028 for dividends, share buybacks, and acquisitions. With the TSX dividend stock down sharply, buybacks look increasingly attractive, and the board is taking notice.
The sell-off has been driven by fear, not fundamentals. Thomson Reuters continues to deliver, and the dividend keeps growing.
Given consensus price targets, the TSX stock trades at a 69% discount in February 2026.
