Telus (TSX:T) recently delivered one of the biggest surprises in Canadian telecom this year. The company cut its dividend by more than half and trimmed its full-year outlook, sending the stock lower.
Valued at a market cap of $21.3 billion, Telus stock is down 48% from all-time highs. So, here’s the question most Canadian investors are asking today: Should you buy, sell, or hold Telus stock right now?
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How did Telus perform in Q2 of 2026
Telus reported second-quarter 2026 results on July 31.
Service revenue of $4.4 billion was down 1% year over year, and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $1.8 billion fell 2%.
A large noncash write-down at Telus Digital pushed basic earnings per share into negative territory. Telus shares fell more than 11%, closing at $13.38, down from $15.08 the day before, according to Morningstar.
Telus reset its quarterly payout to $0.1875 per share, or $0.75 annually, a reduction of 55% from the prior rate. The new dividend is payable on October 1, 2026, to shareholders of record as of September 10, 2026.
Telus also lowered its free cash flow payout ratio target to a range of 45% to 60%, down from 60% to 75% previously, and it ended the discount on its dividend reinvestment plan.
Management also walked back full-year guidance. Service revenue is now expected to be flat to down 2%, versus prior guidance of 2% to 4% growth.
Free cash flow is now projected near $1.8 billion, down from an earlier estimate of about $2.45 billion.
Why did Telus cut its dividend?
The dividend ties directly to a balance sheet problem that has affected the Canadian telecom sector.
Telus, BCE, and Rogers have all spent heavily building out fibre networks over the past several years, which pushed leverage higher even as competition and softer immigration trends weighed on subscriber growth.
BCE already cut its own dividend by more than 50% last year, and Rogers has held its payout steady since 2019.
Telus is carrying roughly 3.5 times net-debt-to-adjusted-EBITDA (earnings before interest, tax, depreciation, and amortization). New CEO Victor Dodig, who took over from longtime leader Darren Entwistle on July 1, said the company now targets three times leverage or lower by the end of 2028.
The dividend reset alone is expected to save Telus about $2.7 billion through 2028, cash that management plans to funnel toward debt reduction.
Moreover, Dodig announced a leadership shakeup on July 22, bringing back veteran executive David Fuller to lead a newly consolidated Telus Communications unit, while Navin Arora takes charge of Telus Health, Telus Agriculture, and Telus Digital under one Global Platform Businesses banner.
Telus stock: Buy, sell, or hold
So, where does that leave investors weighing Telus stock today?
Telus still owns a leading fibre network, a growing mobility business, and early-stage exposure to sovereign AI data centres, assets Dodig called “difficult to replicate.”
Management is also targeting a minimum of 10% compounded annual free cash flow growth for 2027 and 2028, and a moratorium on acquisitions signals real discipline.
But the near-term picture is messier.
Telus lowered its guidance; Telus Digital remains under pressure from AI-driven automation eating into legacy contracts, and the payout investors relied on for years got sliced in half.
Analysts do not expect further dividend cuts across the sector, but Telus specifically needs to prove its turnaround plan works before the stock deserves a premium.
Even after the dividend cut, Telus offers you a tasty dividend yield of 6% in August 2026. For patient investors comfortable with a multiyear turnaround story, initiating a small position in a blue-chip telecom stock could make sense.
I rate Telus stock a “Hold” right now. I would rather see a couple of quarters of stable execution, particularly around Telus Digital and debt paydown, before recommending fresh capital.
Investors looking for reliable Canadian dividend income today may find better risk-adjusted options elsewhere, at least until Telus proves its new plan is on track.
