Why This Dividend Giant's 14% Drop Caught My Attention

Why This Dividend Giant’s 14% Drop Caught My Attention

Understand the implications of Telus Corporation’s dividend reduction and its influence on share price performance.

Puja Tayal

Author Bio

Puja Tayal grew up in a small-business family where dinner conversations often centred on working capital and savings. Her early experiences with investing, particularly during the 2008 financial crisis, shaped her approach to understanding markets and evaluating investment opportunities. She began her career at a mutual fund company before moving into investor education and financial writing for asset and wealth management firms. Before joining The Motley Fool, Puja wrote for Market Realist, where she extensively covered the semiconductor industry. Her published work has also appeared in The Indian Express. Puja believes every stock has a story that can help investors understand its potential returns. She combines business analysis with different investing approaches to help investors make informed decisions and align their portfolios with their long-term financial goals. Outside of finance, Puja enjoys long drives, catching up with friends, watching superhero and science-fiction movies, and managing her family portfolio. She also has a keen interest in artificial intelligence and its potential to reshape the world.

Education

Bachelor's degree in Accounting and Finance, University of Mumbai (2007)
CFA Level I

Areas of Expertise

Qualitative company analysis, management strategy, risk assessment, long-term investing, portfolio diversification and rebalancing, dividend reinvestment, cyclical growth opportunities, compounding strategies, growth stocks, and dividend stocks.

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Favorite Investment Quote

"Risk comes from not knowing what you're doing." — Warren Buffett

Published August 10, 4:50 pm EDT

Dividend giant Telus Corporation‘s (TSX: T) stock price fell 14% even though the stock was already trading at its 14-year low. Now it has dipped to a 15-year low. The stock price fell after the company did the inevitable: slashed the dividend by 55% and ended the discount on the dividend reinvestment plan (DRIP) from October 1, 2026. Trading near $13.5 per share, it may look dirt cheap, but it is a correction reflecting the new realities. While a dividend cut will help Telus revive its share price, it is better to wait and watch as the company resets its capital strategy.

man looks worried about something on his phone — Source: Getty Images

Why this dividend giant’s 14% dip caught my attention

In less than six months, Telus has revised its capital plan twice, announced contradictory plans, and undergone a management reshuffle.

In December 2025, it announced plans to reduce capex and channel the money to bring down net debt to 3 times its adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) by 2027. Then in May 2026, it announced a $66 billion investment in artificial intelligence (AI) and network infrastructure for the next five years. In July 2026, the new management is re-evaluating AI investments.
In October 2025, it acquired Telus Digital for US$539 million to integrate digital customer experience solutions, AI-driven platforms, and SaaS innovation across its platform and use the latter’s recurring cash flow to repay debt. In the second quarter of 2026, Telus wrote off $2.1 billion in goodwill impairment of the TELUS Digital cash-generating unit.
The management reshuffle was a normal course of business, as the CEO and CFO retired after 26–30 years of service. The new CEO, Victor Dodig, is new to the Telus family, having joined its Board in May 2022. The new CFO, Gopi Chande, is a Telus veteran with over 16 years with the company.

Both took the helm on July 1 and have made some aggressive restructuring in a month, which was visible in the second-quarter earnings report.

Telus gets a new look

Victor Dodig is bringing back David Fuller to head TELUS Communications and grow average revenue per user (ARPU) and the overall share of a customer’s wallet. Fuller’s previous tenure with Telus was from 2004 to 2019, during which he headed marketing for 4G and 4G long-term evolution (LTE).

Having been in the CEO’s chair for only a month, Dodig shared some of his thoughts on how he plans to turn around Telus at the second-quarter 2026 earnings call. There is some work in progress, which he will clarify in November with a more detailed corporate strategy and the progress of current actions in the third-quarter earnings call.

Should you buy the dip of this dividend stock or wait and watch?

I would wait for the November briefing before buying Telus shares, as growing uncertainty around the roadmap increases the risk of further downside.

For starters, the 2% DRIP discount, which the previous management wanted to phase out by 2028, will end in the third quarter of 2026. The new management has reduced the long-term dividend payout target from 60–75% of free cash flow (FCF) to 45–60%.

The new management has pushed the target to reduce net debt to 3 times its EBITDA to 2028 from 2027. The previous management wanted to reduce this ratio by increasing EBITDA and paying down debt. The new management expects to realise $2.7 billion in cumulative cash savings from the dividend cut in three years and use this money to repay debt.

The approach of the old and new management is very different. Until there is clarity on the path to turnaround and the outcome is visible in earnings results, I would be cautious of buying Telus.

What should you look for in Telus stock?

A complete restructuring can go either way: a turnaround towards profitability or accelerated losses. Telus’s new management is focused on deleveraging the balance sheet. If it succeeds in doing so, Telus’s share price could be a successful turnaround story. However, the financial turnaround should not come at the cost of the AI growth opportunity.