Telus (TSX: T) has been one of the most painful stories on the TSX this year. The stock closed September 17 at $12.47, down roughly 50% from its all-time high of $25.60. For anyone who bought Telus for the dividend income, and there were many, the past few months have been a harsh reminder of what happens when a payout becomes unsustainable.
But there is a growing chorus of voices saying the worst may already be priced in. On BNN Bloomberg’s Market Call earlier this month, Newhaven Asset Management CEO Ryan Bushell said Telus looks “washed out” after its dividend cut, but argued the underlying business remains defensive.
Is he right? Here is my analysis.
Source: Getty Images
What the dividend cut actually changed
On July 31, Telus reset its quarterly payout from $0.4184 per share to $0.1875, marking a 55% reduction. Annualized, that is $0.75 per share, down from $1.67. The new dividend is payable October 1 to shareholders of record as of September 10.
Management also lowered full-year guidance. Free cash flow is now expected near $1.8 billion, down from an earlier estimate of $2.45 billion. The payout ratio target was cut to 45% to 60% of free cash flow, from 60% to 75% previously.
The reset is expected to save approximately $2.7 billion in cumulative cash through 2028, money management plans to direct toward debt reduction.
The case for buying
Bushell pointed to something important: Telus owns one of Canada’s main fibre-to-the-home networks, and the buildout is closer to the end than the beginning. That matters because capital spending should decline from here, which supports free cash flow.
He also noted that Telus could benefit from AI through cost reductions, though he was clear the turnaround will take time. “This is not a one-year pick,” Bushell said. “I fully expect to come back a year from now, and this might not be up.”
Even after the cut, the stock offers a yield of roughly 5% to 6%, depending on the share price. That is not the 11% yield investors used to collect, but it is still a respectable income stream for patient shareholders.
The case for waiting
The near-term picture is honestly quite messy. Telus Digital, the division acquired for US$539 million in October 2025, is under pressure from AI-driven automation eating into legacy contracts. That triggered a $2.1 billion non-cash write-down in the second quarter.
Analyst sentiment remains cautious. According to CanTechLetter, two analysts rate Telus a “Buy,” 12 rate it a “Hold,” and nine rate it a “Sell,” with a consensus target of $17.18. BMO Capital’s Tim Casey maintained a Hold rating on September 15 with a $15.00 target.
That is not a ringing endorsement, but is also not a sell signal.
My verdict: Not yet
My honest answer is no, not yet. However, that is not the same as saying Telus is a bad company. But buying a stock simply because it has fallen a long way is not a strategy. Plenty of investors bought Telus at $18 on the way down, convinced the worst was over, and watched it slide to $12.47 anyway. I wouldn’t go on to particularly say that this is an undervalued stock at the current price.
What I want before putting fresh capital to work is evidence. Two quarters of stable free cash flow, progress on the leverage target, or signs that Telus Digital has stopped bleeding. If those show up, the stock could rerate quickly, and I would rather pay $14 for a business that is clearly recovering than $12.47 for one that might not be.
Foolish takeaway
Bushell’s comparison to Manulife, AltaGas, and Enbridge is fair. Those stocks did eventually reward patient investors. But they also spent years in the doldrums first. But there is no rule that says the turnaround has to start this quarter.
Patience is what matters the most here. This is not a quick trade but a multi-year turnaround story. For income investors who need reliable cash flow today, there are safer options on the TSX.
