This TSX Dividend Stock Is Down 26% and Still Worth Every Dollar

Given its discounted valuation, resilient telecom operations, expanding healthcare and digital businesses, and ongoing deleveraging efforts, Telus offers an excellent entry point for income-focused investors.

Key Points
  • Attractive Valuation and Reliable Dividends: After a 26% decline, Telus offers a compelling buying opportunity with a discounted valuation and a robust quarterly dividend yield of 9.79%.
  • Strategic Growth and Deleveraging: Telus is enhancing long-term prospects by investing in 5G and digital health while focusing on debt reduction, positioning itself for future growth amidst telecom sector challenges.

Dividend stocks can play a vital role in long-term wealth creation, as they offer investors a combination of capital appreciation and steady passive income through regular dividend payouts. Companies that consistently pay dividends often operate mature and well-established businesses that generate stable cash flows, enabling them to reward shareholders even during uncertain economic periods. Thanks to their resilient business models and dependable payouts, dividend-paying stocks are generally less vulnerable to economic downturns and broader market volatility.

Although Canadian equity markets have rebounded sharply in recent weeks, several quality companies continue to trade well below their recent highs. One notable example is Telus (TSX: T), whose stock remains more than 26% below its recent peak. Against this backdrop, let’s examine Telus’s recent performance, growth outlook, dividend profile, and valuation to determine whether the telco presents an attractive buying opportunity for long-term investors.

dividend stocks are a good way to earn passive income

Source: Getty Images

Telus’s first-quarter performance

Telus is one of Canada’s three largest telecom providers, offering nationwide wireless and broadband services to consumers and businesses. Last month, the company reported mixed first-quarter results, with revenue declining 0.6% year over year, driven by weaker contributions from its TELUS Technology Solutions and TELUS Digital segments. However, stronger performance from the TELUS Health division partially offset the decline.

Amid softer revenue and elevated operating expenses, Telus reported net income of $144 million, down from $301 million in the same quarter last year. Excluding one-time and non-recurring items, the company reported adjusted earnings per share (EPS) of $0.23, a 11.5% year-over-year decline. Meanwhile, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) slipped marginally by 0.2% to $1.84 billion.

Despite these near-term pressures, Telus generated solid free cash flow growth during the quarter, rising 19.5% to $583 million, largely driven by lower income tax payments.

Having reviewed its recent quarterly performance, let’s now examine Telus’s long-term growth prospects.

Telus’s growth prospects

The continued expansion of e-commerce, remote work, and learning, and the rising adoption of artificial intelligence (AI) technologies are driving higher demand for reliable telecommunications services, creating a favourable environment for Telus. To capitalize on these trends, the company continues to invest heavily in expanding its 5G wireless and broadband infrastructure, which should help the company grow its subscriber base and strengthen its long-term financial performance.

Beyond its core telecom operations, Telus is also expanding its healthcare and digital businesses through a combination of acquisitions and organic growth initiatives. The company continues to strengthen its presence in electronic medical records solutions, patient health management services, health benefits administration, and virtual healthcare services, all of which could become meaningful long-term growth drivers.

For 2026, management expects consolidated service revenue and adjusted EBITDA to grow by 2-4%, while forecasting free cash flow of approximately $2.45 billion, representing year-over-year growth of about 10%.

Supported by improving cash flow generation, Telus has also been focused on reducing leverage. Management expects its net debt-to-adjusted EBITDA ratio to decline to 3.3 by the end of this year and further improve to 3.0 by the end of next year. Given these initiatives and expansion opportunities, Telus appears well-positioned to deliver steady, long-term growth.

Investors’ takeaway

Telus has faced significant pressure over the past few years due to intensifying competition in Canada’s telecom industry, elevated debt levels, and the suspension of its multi-year dividend-growth program. As a result, the stock has declined roughly 26% from its 52-week high. However, this pullback has also made the valuation more attractive, with Telus currently trading at a next-12-month price-to-sales multiple of just 1.3.

In December 2025, the company paused its long-standing dividend-growth program as part of its broader effort to strengthen its balance sheet and accelerate deleveraging initiatives. Despite that move, the company continues to offer an attractive quarterly dividend of $0.4184 per share, yielding approximately 9.79%.

While some investors remain concerned about the sustainability of the payout given the company’s elevated payout ratio, any future dividend adjustment could ultimately improve Telus’s financial flexibility by enabling faster debt reduction and reinforcing its balance sheet.

Given its discounted valuation, resilient telecom operations, expanding healthcare and digital businesses, and ongoing deleveraging efforts, Telus appears well-positioned for long-term recovery and could be an attractive opportunity for income-focused investors willing to tolerate near-term volatility.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How I’d Structure My $14,000 TFSA for Constant Income

If you have $14,000 saved in your TFSA, here is one easy investment strategy to earn $50 of tax-free monthly…

Read more »

woman looks at iPhone
Dividend Stocks

I’m Not Selling Telus After the 55% Dividend Cut: Here’s Why

Contrary to what the market seems to be saying, Telus Corporation (TSX: T) still has a lot going for it.…

Read more »

monthly calendar with clock
Dividend Stocks

A No-Nonsense 3.7% Dividend Stock That Can Pay Retirees Monthly

This no-nonsense dividend stock has returned more than $3.4 billion to shareholders through dividends since 2013.

Read more »

dreaming of financial success
Dividend Stocks

3 Questions to Ask Before Buying a Dividend Stock

Buying a dividend stock? Here are three questions to help you look beyond the yield, with examples from Enbridge, Fortis…

Read more »

Woman in private jet airplane
Dividend Stocks

Make $100 a Month Tax-Free: How Much to Invest in Diversified Royalty and Where

The TFSA is the ultimate investment account to place your money and earn tax-free income.

Read more »

man in bowtie poses with abacus
Dividend Stocks

Passive Income From Dividends: What Canadians Can Realistically Expect

Here's the actual dividend math the passive income gurus won't show you.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

RRSP, TFSA or Both? A Quick Guide by Income Level

Your RRSP and TFSA are complementing accounts that you can use to shield your income from taxes.

Read more »

Real estate investment concept with person pointing on growth graph and coin stacking to get profit from property
Dividend Stocks

Buying Your First Home? The $8,000 FHSA Deduction Most Renters Miss

An eligible renter's $8,000 FHSA contribution can save $2,400 at a 30% tax rate, with the purchase date guiding investments.

Read more »