Telus (TSX:T) shareholders have taken a beating over the past four years. Contrarian investors are wondering if Telus stock is now oversold and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividend income and a shot at some decent potential capital gains.
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Telus’s share price
Telus trades near $18.50 per share at the time of writing. The stock is down about 19% in the past 12 months and is way off the $34 it reached in 2022 before starting an extended slide.
Rising interest rates in 2022 and 2023 triggered the initial decline in the share price of Telus and its communication sector peers. Telecom companies carry large debt loads on their balance sheets due to the significant amounts they have to borrow to fund their capital programs. It is expensive to build and upgrade wireline and wireless network infrastructure, particularly in Canada, where there is a relatively small population spread out over a massive geographic area.
The sharp increase in borrowing costs can drive up debt expenses. This puts pressure on profits and cuts into cash that is available to pay dividends or reduce debt.
The Bank of Canada cut interest rates in 2024 and 2025, but Telus remained under pressure due to other challenges. The company’s Telus Digital (Telus International) subsidiary saw revenue decline considerably. At the same time, Telus battled a price war with its competitors in the domestic market. This squeezed margins on wireless plans. The restrictions placed on immigration in the past two years have also impacted the industry as fewer newcomers arrived to buy mobile devices and sign up for data services.
Late in 2025, Telus announced it would pause dividend increases as a measure to try to stop the slide in the share price and to focus more on strengthening the balance sheet.
Opportunity
Telus has made progress on monetizing some assets to reduce its debt load. The company sold a 49.9% stake in its mobile tower portfolio last year. Telus is considering options for the sale of part of its Telus Health business to raise additional funds. As more capital gets freed up and used to shore up the balance sheet, the market might be more comfortable with the sustainability of the dividend.
Telus also recently announced that a new CEO will take over in July. Victor Dodig, the former CEO of CIBC, will be the new top boss. New CEOs often make aggressive moves when implementing a turnaround strategy. When successful, share prices can move materially higher as a result.
Analysts, however, are also wondering if the new CEO will cut the dividend as one of his first moves to free up cash to reduce debt. This is definitely possible, and needs to be considered by investors who are holding Telus primarily for the dividend income.
The bottom line
Near-term volatility is expected, but most of the negative news should already be reflected in the share price, and there is decent upside potential if the new CEO can deliver on the turnaround strategy. If you have a contrarian investing style, Telus deserves to be on your radar today.
