The Bank of Canada held its key interest rate steady at 2.25% on Wednesday. The reasons that the bank cited for this included the war in Iran, the spike in oil prices, and the accompanying economic and political risks.
So far, the TSX has fallen 11% since the beginning of March, which is a lot. One TSX stock that I think investors should buy after the Bank of Canada held its interest rate unchanged is Telus (TSX: T).
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Telus: A once-in-a-lifetime opportunity
It’s no secret that Telus stock has had its share of turmoil in the last while. This all culminated in Telus pausing its dividend-growth program in December 2025, sending investors and analysts into a frenzy. Telus’s stock price has fallen 37% since its 2023 highs.
The state of the telecom industry in Canada has changed. After the government opened it up to competition, major telecoms are dealing with falling average revenue per unit, or ARPU, in their mobile businesses and general competitive pressures. But for Telus, there’s so much more to the story. Years ago, Telus embarked on a plan to diversify its business. Telus Health and Telus Digital were the products of this plan.
Today, both of these segments continue to grow at double-digit rates. And both of these segments offer Telus the potential for future monetization or cash inflows. In fact, Telus is actively looking into monetization strategies, including possible investment from future partnerships.
Telus’s stock price is cheap
Telus’s debt-to-capital ratio is currently high at 65.5%, and its interest expense was $1.3 billion in 2025. That’s high. It’s a good thing for Telus stock that the Bank of Canada held its interest rate steady, as low interest rates clearly benefit the company. This, combined with any progress that Telus makes on debt reduction, will benefit Telus stock. The extra cash from the company’s monetization activities would contribute to Telus’s debt reduction and balance sheet strengthening.
As you know, Telus’s stock price has fallen under the weight of all of these risks. Today, Telus stock is yielding a very generous 9.25%. This yield is supported by a strong cash payout ratio of 70% and strong free cash flow growth. And this, in my view, makes it a stock for long-term investors to consider.
Yes, Telus stock is in a critical moment that is not without risks. The 9.25% yield does highlight this risk. But, if we can reserve a small weighting for Telus stock, it appears to me like this stock has a strong risk/reward profile.
As we look ahead, it’s clear that the company is taking steps to improve its financial health, as management is aggressively pursuing debt reduction. The company has a plan to reduce its leverage ratio to three times by the end of 2027 from 3.4 times at the end of 2025. This compares to a ratio of 3.9 times at the end of 2024.
And, of course, in the meantime, the Bank of Canada’s decision to hold interest rates steady certainly helps.
Recent results show strength
Free cash flow generated in 2025 totalled $2.2 billion. This was 11% higher than the prior year and a record for the company. 2026 guidance is equally positive, with revenue and earnings before interest, taxes, depreciation, and amortization growth of 2% to 4% expected.
Finally, Telus stock is expected to generate $2.4 billion in free cash flow in 2026. This is 10% higher than 2025.
The bottom line
With total debt of approximately $30 billion and an interest expense of over $1.3 billion, Telus stock is surely a beneficiary of the Bank of Canada’s recent interest rate decision. Looking ahead, Telus can be expected to continue to drive free cash flow growth through managing capital expenditures, driving growth in its telecom business and through its monetization strategies.
This will enable the company to improve its balance sheet and its financial health, and as a result, I would expect Telus stock to reflect this and move higher. This is a long game, but for patient investors willing to stay the course, it might just be one of the best dividend bargains out there today.
