The day was July 31, 2026. Telus Corporation (TSX: T) stock nose-dived 14.5% after the company slashed its dividend by 55% and made some long-term adjustments to its dividend policy. Among the three noteworthy changes in dividend policy were:
- Pausing dividend growth until the share price revives.
- Pulling forward the end of the 2% dividend reinvestment plan (DRIP) discount from the end of 2028 to October 1, 2026.
- Reducing the long-term dividend payout target to 45–60% of free cash flow (FCF) from 60–75%.
Interestingly, it has reduced its 2026 FCF guidance from $2.45 billion to $1.8 billion. Even if the company increases FCF by 10% annually for the next two years, it will reach $2.2 billion by 2028. This shows that the Telus of 2025 is a thing of the past.
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Telus looks to find solid ground
In 2026, Telus is looking to stabilize its capital structure and revive its balance sheet while catching up with artificial intelligence (AI). The desperation to find solid ground in the avalanche of technology upgrades and regulatory changes is visible.
Telus began a phased rollout of its 3G network in Manitoba starting December 31, 2025, and plans to shut down the network nationwide by March 1, 2027. The old has to go to make way for new 4G and 5G networks.
It acquired Telus Digital for US$539 million in October 2025 for its recurring cash flow from SaaS services. However, it impaired $2.1 billion in goodwill in the second quarter of 2026, when a portion of that very cash flow became irrecoverable due to AI adoption.
Telus is now looking to invest in AI and satellite broadband to participate in the next generation of communication networks. This disruption and recreation is a normal lifecycle for telcos, like a phoenix rising from its ashes. BCE faced a similar situation in 2025. It stood its ground and continued its biggest restructuring from telco to techno.
The next chapter for Telus is yet to begin
Telus will write the next chapter in its journey over the next three years. The management that monetized the 3G and 4G network has retired. The company now has a new CEO, Victor Dodig, and a new CFO, Gopi Chande.
The new management will lay the blueprint for Telus’s next chapter in the third-quarter earnings call in November. Until then, Telus floats on murky water. The dip in the stock price after the dividend cut might look like an attractive opportunity.
However, Telus is not yet out of the tunnel, and ideas are still being brainstormed. It has already revised its capital plan twice in six months. I won’t be surprised if there is another revision in the third-quarter earnings, the one planned by the new management.
Is Telus stock worth buying now?
For now, I suggest holding off on buying Telus stock until the company presents a stable capital plan and sticks to it for at least six months. Its average revenue per user (ARPU) is declining owing to the regulatory change that allowed mobile virtual network operators like Cogeco Communications (TSX: CCA) to access Telus and BCE networks.
Instead of Telus, Cogeco is a better dividend stock to buy. Cogeco has a 30% dividend payout ratio. It is in a better position to manage falling ARPU because of its asset-light business model. Unlike Telus and BCE, which are chasing AI and satellite communication, Cogeco is building the tried-and-tested wireless data, upgrading from wireline broadband.
Between Telus’s 5.6%, BCE’s 5.3%, and Cogeco’s 6.6% dividend yield, Cogeco’s is the safest, as it is already at a dividend payout ratio of around 40%. BCE and Telus had to halve their dividends to reduce their payout level to 40%. Moreover, Cogeco still has room to grow dividends, depending on the traction of its wireless data business.
