Is TELUS (TSX:T) stock worth buying at today’s discounted price? For Canadian investors seeking income and potential turnaround gains, the answer is more nuanced — but increasingly compelling.
The Canadian telecom sector has faced prolonged pressure, and TELUS has not been spared. Trading at $16.41 per share at writing, the stock now offers a striking dividend yield of roughly 10.2%. While that headline number may attract income investors, it also signals market skepticism — specifically, concerns that the dividend may not be sustainable in its current form.
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Dividend risk — or opportunity in disguise?
TELUS’s dividend profile is the central issue. In 2025, the payout ratio was about 69% of free cash flow, but that figure benefited from non-core asset sales. Strip those out, and the picture weakens. In 2024, the payout ratio was about 107% of free cash flow, and based on net income, the 2025 payout ratio reached an unsustainable 146%.
This raises a realistic possibility of a dividend cut. However, that may not be entirely negative. Even if TELUS were to reduce its dividend by half, investors would still receive a yield of about 5.1% — well above the broader Canadian market average of roughly 2.3%. In other words, a reset could make the dividend safer while still leaving it attractive.
Leadership change could drive a turnaround
A major catalyst is the incoming CEO, Victor Dodig, former leader of CIBC. From a recent Globe and Mail article, “How Telus’s unexpected CEO change came about”: “Over a decade at the helm of CIBC, Mr. Dodig delivered the largest takeover in the bank’s history and rebuilt the balance sheet and culture, moving the bank from worst to first on customer satisfaction.”
His arrival on July 1 could mark a turning point. Strategic actions may include asset sales, cost discipline, and potentially a dividend adjustment. TELUS’s credit rating has already slipped from BBB+ in 2021 to BBB-, underscoring the need for balance sheet repair.
Potential divestitures include TELUS International and TELUS Agriculture — segments that have struggled with margin pressure and execution challenges. Selling underperforming assets could free up capital to reduce debt and refocus on core telecom operations.
Valuation and long-term upside
Despite these challenges, TELUS’s core business remains resilient. The company reported over one million customer additions for the fourth consecutive year in 2025, alongside strong loyalty in its postpaid mobile segment. It also achieved adjusted EBITDA growth of 3.1% in its core operations, indicating underlying stability.
From a valuation perspective, the stock currently trades at roughly a 20% discount to the analyst consensus price target, implying potential upside of nearly 26%. That discount reflects current uncertainty — but also creates an opportunity for patient investors.
Importantly, Canada’s major telecom companies have long histories of maintaining dividends. While a reduction is possible, a complete elimination remains unlikely.
Investor takeaway
TELUS stock is not without risk, particularly regarding its dividend sustainability and balance sheet. However, much of that risk appears priced in. With a new CEO poised to take action, potential asset sales on the horizon, and a still-solid core business, the dividend stock offers a credible turnaround story.
For long-term investors, with an investment horizon of at least five years, willing to accept short-term volatility — and the possibility of a dividend cut — the stock could represent an attractive mix of income and capital appreciation potential.
