This Stock Is Trading Near Its Low and Yielding Over 5.5%

This Canadian stock is trading near its low while offering a high dividend yield of over 5.5%, making it a compelling value and income play.

Key Points
  • This TSX stock is trading near its 52-week low while still offering a dividend yield above 5.5
  • The company cut its dividend by about 55% to preserve cash and focus on reducing its high debt load.
  • The lower payout ratio and $2.7 billion in expected cash savings through 2028 could strengthen the company’s balance sheet and make its new dividend more sustainable.

For income-focused investors, a stock trading near its lows while offering a high dividend yield can present an attractive investment opportunity. One such stock is Telus (TSX: T). Shares of the Canadian telecommunications company are trading near a 52-week low and, even after a significant dividend cut, still offer a yield of more than 5.5%.

However, while Telus’s depressed share price and elevated yield make it a compelling value and income play, investors should look beyond the headline yield. Telus is no longer the dividend-growth story it was a few years ago. The company has shifted its focus toward strengthening its balance sheet, reducing financial pressures, and improving its financial flexibility.

The key question for investors, therefore, is whether Telus’s new dividend is sustainable.

woman looks at iPhone

Source: Getty Images

Telus lowered its dividend

Telus had been one of the top dividend-growth stocks. That changed in December 2025, when management announced a pause in its dividend-growth program while maintaining its quarterly dividend at $0.42 per share.

The pause was an early indication that the company was facing increasing pressure from weaker earnings and a highly competitive operating environment.

Telus has now gone a step further, cutting its quarterly dividend by approximately 55% to $0.90 per share. That translates into an annualized dividend of $0.75 per share.

For existing shareholders, the cut is undoubtedly disappointing. But from an investment perspective, the more important issue is what the reduction means for Telus’s financial position. The dividend cut should be viewed as a reset of its capital-allocation strategy.

Why Telus reset its dividend

The Canadian telecom market has become increasingly challenging. Aggressive pricing competition is putting pressure on margins. At the same time, slower subscriber growth is limiting the industry’s ability to generate meaningful revenue expansion. Lower population growth, regulatory pressures, and increased competition from new entrants are compounding the challenges.

Telus’s recent financial results reflect this pressure. The company’s adjusted net income declined to $1.41 billion in 2025 from $1.55 billion in 2024. The weakness has carried into 2026, with adjusted net income falling another 26% year over year in the second quarter.

That deterioration helps explain why management has chosen to prioritize cash preservation and debt reduction.

The dividend cut to strengthen Telus’s balance sheet

While a dividend reduction is negative from an income perspective, it can be positive for the company’s long-term financial health.

Telus reported net debt to adjusted EBITDA of approximately 3.5 times at the end of the second quarter. That is a meaningful level of leverage, particularly in an environment where earnings growth is under pressure. Management is targeting leverage of approximately three times or lower by the end of 2028.

The dividend reset is expected to play an important role in achieving that target. Telus estimates that the lower dividend will generate approximately $2.7 billion in cumulative cash savings through 2028, with those funds directed toward debt reduction.

Lower leverage would reduce balance-sheet risk, lower financing costs, and give Telus more room to invest in its network and pursue other growth opportunities.

Another important change is Telus’s revised dividend payout framework. Telus now targets a dividend payout ratio of 45% to 60% of trailing 12-month free cash flow, compared with its previous target of 60% to 75%. That is a significant improvement in the margin of safety surrounding the dividend.

A lower payout ratio means Telus should retain more of its internally generated cash, allowing it to reduce debt while continuing to fund capital expenditures and other strategic priorities.

The bottom line

Telus may no longer be primarily a dividend-growth investment, but its current dividend still offers attractive income. The dividend reset provides greater financial flexibility to reduce leverage, strengthen free cash flow, and improve long-term capital allocation.

Telus is also monetizing non-core assets, which should further support its balance sheet. Meanwhile, the company continues to add customers and benefits from strong subscriber loyalty. With capital spending expected to decline, Telus should have more flexibility to return cash to shareholders. The new, more sustainable payout ratio also strengthens the outlook for long-term dividend stability.

Fool contributor Sneha Nahata 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

Middle aged man drinks coffee
Dividend Stocks

TFSA or RRSP? Your Tax Rate Could Change the Answer

Your current and future tax rates can help determine whether a TFSA or RRSP deserves your next retirement contribution.

Read more »

dividend stocks are a good way to earn passive income
Dividend Stocks

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

I would split $14,000 across three stocks for income.

Read more »

oil pump jack under night sky
Dividend Stocks

Forget GICs: This Dividend Stock Pays You 4% Monthly

GIC rates look thin after taxes. This top Canadian dividend stock pays you each month, yields about 4%, and covers…

Read more »

infrastructure like highways enables economic growth
Dividend Stocks

3 Savvy Ways Canadians Can Invest in the Country’s Infrastructure Boom

Find out how Prime Minister Carney's plans for Canadian infrastructure can benefit investors and revitalize key industries.

Read more »

ways to boost income
Dividend Stocks

$10,000 in These Stocks Could Be All It Takes to Build Real Monthly Income

A $10,000 investment split between two monthly-paying Canadian REITs could currently generate about $50 in passive income every month.

Read more »

Concept of rent, search, purchase real estate, REIT
Dividend Stocks

Looking for TFSA Income? This 7.6% Dividend Stock Should Snag Your Attention

Firm Capital Property Trust's monthly distribution recently showed improved safety. Here's why the 7.6% yield belongs in your TFSA.

Read more »

A plant grows from coins.
Dividend Stocks

Are These Still the Best Dividend Stocks in Canada?

With GICs yielding over 4% and their business models shifting, are BCE, Enbridge, and TD Bank still among Canada's top…

Read more »

shopper carries paper bags with purchases
Dividend Stocks

$1,000 in This Stock Could Be Paying You for the Rest of Your Life

A $1,000 investment won't create instant passive income, but Fortis's 52-year dividend-growth streak gives it decades-long potential.

Read more »