The market has not been forgiving to companies that couldn’t produce high revenue growth. Non-energy infrastructure stocks, from railways to telecom, have been declining for a long time because of their high capital demand and slowing revenue. These sectors resorted to cost-cutting and efficiency improvement to improve their profits, making value investors think whether the market was too quick to write them off.
Write-offs occur when investors sell their shares as they see no recovery.
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The railway stock that the market wrote off
Canadian National Railway (TSX:CRN) shares have dipped 25% since March 2024 as its freight volumes fell. In 2024, labour disputes, port strikes, and severe weather conditions affected freight volumes, and in 2025, US tariffs on petroleum products, steel, aluminum, and lumber.
The escalating trade tensions tested investors’ patience and even forced Canadian National Railway to scrap its medium-term growth outlook. Canadian National Railway shifted focus to improving efficiency with tighter costs, increased asset utilization, and improved locomotive productivity. It offset lower freight volumes from metals and forest products with higher volumes of agriculture and intermodal transport.
The outcome was 1% revenue growth and 8% earnings per share growth in 2025. It has increased its 2026 dividends by 3% and sits at a comfortable dividend payout ratio of 66% of free cash flow. Canadian National Railway expects flat revenue for 2026.
It has potential to grow in the long term as the government is looking to diversify its export markets by building new ports, airports, and railway infrastructure. This transition will increase freight volumes in the medium term and drive recovery for patient investors in Canadian National Railway. Until then, they can be assured of receiving a $3.66 dividend per share.
The telecom stock that the market wrote off
Like Canadian National Railway, the market also wrote off the telecom sector, Telus International (TSX:T) in particular. While BCE stock surged 20% since its dividend cut in May 2025, Telus stock fell 25%. Most recently, Telus stock dipped as much as 9.8% in April over fears of a possible dividend cut. A month before the telco paused dividend growth on December 3, 2025, the stock fell by over 12%. If the dividend cut fears materialise, the write-off could help the stock bottom out. Telus could probably mimic BCE’s recovery rally after a dividend cut.
Let’s face it, Telus’s 110% dividend payout ratio after including the dividend reinvestment plan (DRIP) hasn’t been helping its balance sheet. The company plans to fix its balance sheet by reducing net debt to 3 times its adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization and increasing free cash flow by an average annual rate of 10%. Even with this strategy, the dividend payout ratio (including DRIP) will reach 100% by 2027.
The market write-off of Telus over fears of dividend cuts could be an opportunity for value investors to jump in for a share price recovery in the medium term, as in the case of BCE.
Investor takeaway
The market write-offs of the above two stocks have pulled the share price to an attractive valuation. While the above companies face fundamental weaknesses, their economic moat of size and vast infrastructure is not easy to replicate. When the dust settles, Canadian National Railway will emerge more efficient, and Telus will be leaner and more financially flexible.
