Telus Dividend Reliability: Is the Telecom Still Worth Holding?

Telus (TSX:T) stock might be a falling knife, but the shares still look like a dividend deal going into November 2026.

Key Points
  • Telus has kept sliding (down about 44% in a year and roughly 66% off its peak), so even with a ~6.32% yield and a lower price, it still looks like a risky falling-knife situation.
  • The stock may be buyable if you believe cash flow improves and debt gets worked down, but the high debt load and rate risk mean any adding should be slow and incremental, with AI data-centre growth as the key wild card.

It’s been quite a while since Telus (TSX: T) reduced its payout, and things haven’t gotten a lot better over the past year, with the shares collapsing another 44%. Indeed, I never thought that the former telecom titan and dividend darling would have a realistic shot at plunging to the single digits.

But with the name going for $11 and change with so much negative momentum behind it, it might not be all too long before shares of T dive into the single digits while the yield looks to swell once again.

Today, the shares yield a nice 6.3%, but, of course, there are 6%-yielders on the TSX Index that don’t entail trying to catch a falling knife. Personally, I think Telus stock continues to be an incredibly uncertain name and one that could prove risky to bottom-fish for.

While I do think that the shares are starting to get ridiculously oversold, I can’t say that I’m all too enthused by the road ahead. Now, shares are quite cheap, going for 15.7 times forward price-to-earnings (P/E).

woman relaxes with phone

Source: Getty Images

Shares look cheap, but there’s still quite a bit of debt

But let’s be real, that’s not exactly a “steal” of a deal for a stock that’s shed close to 66% from its peak. While the company has made progress in improving the cash flow situation, the debt load remains a bit of a concern with the 224% debt-to-equity ratio.

With rising fears of increasing interest rates, perhaps it’s no mystery why investors would rather hit the sell button on the stock with the intent of asking questions later. While I do think that Telus is starting to look tempting for deep-value investors looking for an outsized payout, I wouldn’t rush into the stock here.

Catching a falling knife is just too hard and too painful!

For those keen on adding to their position, I’d much rather be an incremental buyer, perhaps buying in quarters over the span of a year.

That way, investors will take the timing out of the equation and won’t be discouraged if their attempt to bottom-fish doesn’t go well over the near term. Even with a dollar-cost averaging (DCA) strategy in place, there’s really no way to mitigate all the risks with a name that could stay untimely for another year or maybe even a bit more.

Why Telus is worth holding

As for whether Telus is still worth holding, I think it is. The stock looks to be fairly valued, maybe even mildly undervalued, with expectations that are so low that it might not take much to put an end to the multi-year bear market.

Perhaps the biggest reason to stay the course, even if you’re underwater, is the solid dividend. While I can’t say for sure how much rate-hike risk is baked in, I do think that management deserves the benefit of the doubt as they look to shore up cash to reduce that debt.

It’s a hefty amount of debt, but more than manageable. The main wild card, in my view, is the sovereign AI data centre growth pathway, which might be the growth driver that makes Telus a dividend darling again or maybe, if AI doesn’t keep booming, it’ll prolong the road to recovery. Either way, it’ll be an interesting ride as we head into year’s end.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.

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