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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 long-term adjustments to its dividend policy. Key changes included 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, and reducing the long-term dividend payout target to 45–60% of free cash flow (FCF) from 60–75%. Telus also revised its 2026 FCF guidance from $2.45 billion to $1.8 billion. Even with a 10% annual increase in FCF for the next two years, it would reach $2.2 billion by 2028, indicating a shift from the Telus of 2025.
Telus aims to stabilize its capital structure and balance sheet while investing in artificial intelligence (AI) and satellite broadband. The company began a phased rollout of its 3G network in Manitoba, starting December 31, 2025, and plans to shut it down nationwide by March 1, 2027. Telus acquired Telus Digital for US$539 million in October 2025 but impaired $2.1 billion in goodwill in the second quarter of 2026 due to irrecoverable cash flow from AI adoption.
Telus is now led by a new management team, including CEO Victor Dodig and CFO Gopi Chande, who will outline the company’s next chapter in the third-quarter earnings call in November. The stock dip may seem attractive, but Telus remains uncertain. The company has already revised its capital plan twice in six months, and another revision is possible. Telus’s average revenue per user (ARPU) is declining due to regulatory changes allowing mobile virtual network operators like Cogeco Communications (TSX: CCA) to access its networks. Cogeco, with a 30% dividend payout ratio and a safer asset-light business model, is considered a better dividend stock compared to Telus and BCE, which had to halve their dividends to reduce payout levels to around 40%. Cogeco’s dividend yield of 6.6% is currently the safest among the three, with room for future growth in its wireless data business.
Source: The Motley Fool Canada
