Telus (TSX: T) has faced significant pressure. Its stock has dropped about 33% since the beginning of the year. Moroever, it is trading nearly 47% below its 52-week high. The decline has largely been driven by a dividend reduction and a weaker-than-expected outlook.
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A major shift in Telus’s dividend Policy
For years, Telus was regarded as a dependable dividend-paying stock, supported by a history of regular dividend increases. However, ongoing operational challenges eventually forced the telecommunications company to reconsider its distribution policy. Management first suspended its dividend growth program, then cut its quarterly payout by about 55%.
The decision highlights mounting pressure on the company’s earnings and cash flow. In December 2025, Telus adopted a more cautious financial approach by suspending its dividend growth program and maintaining its quarterly dividend at $0.42 per share.
Since then, the operating environment has remained difficult. Telus continues to contend with intense competition in Canada’s telecommunications sector, aggressive pricing strategies, slower population growth, and regulatory challenges. These factors have squeezed margins and limited the company’s ability to expand profitability.
The company’s financial results reflect these challenges. Telus’s adjusted net income declined from $1.55 billion in 2024 to $1.41 billion in 2025. The downward trend continued into 2026, with its bottom line declining further.
The dividend cut is intended to help Telus conserve cash, address its substantial debt burden, and improve its overall financial position. The move is likely to give management more flexibility to strengthen the balance sheet and navigate ongoing business challenges.
However, even after the dividend cut, Telus offers a yield of about 6.6%, which appears compelling and attracts investors seeking regular income.
Can you rely on Telus’s dividend?
Telus’s dividend cut may have disappointed investors, but the decision aims to improve the company’s financial health and make future payouts more sustainable. The company expects to save around $2.7 billion in cash through 2028, which it plans to use mainly to reduce debt.
At the end of Q2, its net debt-to-adjusted EBITDA ratio was 3.5, and Telus aims to bring it down to 3 or less by the end of 2028. Besides the dividend cut, Telus is focused on lowering capital spending and selling non-core assets to strengthen its balance sheet.
With its major PureFibre network expansion nearing completion, Telus expects to be more selective about future investments, focusing on projects that can deliver strong returns. The company also plans to cut costs by improving operational efficiency and using technology more effectively.
Going forward, Telus will focus its investments on areas with solid growth potential, including wireless services, fibre networks, digital services, and artificial intelligence (AI) infrastructure. These efforts could help the company improve profitability and support long-term dividend payments.
Overall, the dividend reduction reflects ongoing challenges impacting Telus. However, the move could prove beneficial in the long run by helping Telus reduce debt and improve financial flexibility. The company has also lowered its target dividend payout ratio from 60%–75% to 45%–60%, making its dividend policy more sustainable.
In short, Telus’s lower dividend commitment, tighter spending controls, and debt-reduction plans could put the company on a stronger financial footing. Although risks remain, the stock’s payout appears reliable.
