Is TELUS (TSX:T) inventory price shopping for at in the present day’s discounted worth? For Canadian traders searching for revenue and potential turnaround positive aspects, the reply is extra nuanced — however more and more compelling.
The Canadian telecom sector has confronted extended strain, and TELUS has not been spared. Buying and selling at $16.41 per share at writing, the inventory now affords a placing dividend yield of roughly 10.2%. Whereas that headline quantity might appeal to revenue traders, it additionally indicators market skepticism — particularly, issues that the dividend is probably not sustainable in its present type.
Supply: Getty Photos
Dividend threat — or alternative in disguise?
TELUS’s dividend profile is the central subject. In 2025, the payout ratio was about 69% of free money move, however that determine benefited from non-core asset gross sales. Strip these out, and the image weakens. In 2024, the payout ratio was about 107% of free money move, and primarily based on internet revenue, the 2025 payout ratio reached an unsustainable 146%.
This raises a sensible risk of a dividend reduce. Nonetheless, that is probably not fully detrimental. Even when TELUS have been to cut back its dividend by half, traders would nonetheless obtain a yield of about 5.1% — properly above the broader Canadian market common of roughly 2.3%. In different phrases, a reset might make the dividend safer whereas nonetheless leaving it engaging.
Management change might drive a turnaround
A serious catalyst is the incoming CEO, Victor Dodig, former chief of CIBC. From a latest Globe and Mail article, “How Telus’s sudden CEO change took place”: “Over a decade on the helm of CIBC, Mr. Dodig delivered the most important takeover within the financial institution’s historical past and rebuilt the stability sheet and tradition, shifting the financial institution from worst to first on buyer satisfaction.”
His arrival on July 1 might mark a turning level. Strategic actions might embody asset gross sales, price self-discipline, and doubtlessly a dividend adjustment. TELUS’s credit standing has already slipped from BBB+ in 2021 to BBB-, underscoring the necessity for stability sheet restore.
Potential divestitures embody TELUS Worldwide and TELUS Agriculture — segments which have struggled with margin strain and execution challenges. Promoting underperforming belongings might liberate capital to cut back debt and refocus on core telecom operations.
Valuation and long-term upside
Regardless of these challenges, TELUS’s core enterprise stays resilient. The corporate reported over a million buyer additions for the fourth consecutive 12 months in 2025, alongside robust loyalty in its postpaid cellular phase. It additionally achieved adjusted EBITDA progress of three.1% in its core operations, indicating underlying stability.
From a valuation perspective, the inventory at the moment trades at roughly a 20% low cost to the analyst consensus worth goal, implying potential upside of almost 26%. That low cost displays present uncertainty — but in addition creates a possibility for affected person traders.
Importantly, Canada’s main telecom firms have lengthy histories of sustaining dividends. Whereas a discount is feasible, a whole elimination stays unlikely.
Investor takeaway
TELUS inventory just isn’t with out threat, significantly concerning its dividend sustainability and stability sheet. Nonetheless, a lot of that threat seems priced in. With a brand new CEO poised to take motion, potential asset gross sales on the horizon, and a still-solid core enterprise, the dividend inventory affords a reputable turnaround story.
For long-term traders, with an funding horizon of not less than 5 years, keen to simply accept short-term volatility — and the potential of a dividend reduce — the inventory might characterize a horny mixture of revenue and capital appreciation potential.
