Telus Corporation, a prominent Canadian telecommunications company, has experienced significant volatility in its stock, particularly with fears surrounding potential dividend cuts. Recently, the stock price dropped over 9% in April 2026, mirroring previous trends observed in BCE, another telecommunications giant.
Telus Stock Performance: A Comparative Analysis
Looking back at BCE’s situation a year prior, the company paused dividend growth before ultimately reducing its dividend by 56% following disappointing financial results. BCE reported a 1.1% decline in revenue and an 8.1% drop in free cash flow (FCF) in 2024.
Telus’s financial trajectory shows some parallels but with notable differences. By the end of 2025, Telus paused dividend growth and modified its dividend-reinvestment plan (DRIP), eliminating a 2% discount on treasury shares by 2027. Nevertheless, its revenue grew by 1%, and free cash flow increased by 11% that same year.
Future Projections for Telus
For the upcoming three years, Telus projects a revenue growth rate of 2-4% in 2026 and anticipates its AI-enabled revenue will rise to an average of 30%, reaching approximately $2 billion by 2028.
- 2025 Financials: 1% revenue growth, 11% FCF growth.
- 2026 Revenue Guidance: Forecasted growth of 2-4%.
- AI Revenue Growth: Expected to average $2 billion by 2028.
Debt Management and Dividend Strategy
Financial analysts have drawn attention to Telus’s approach to managing its debt. By 2025, Telus’s leverage ratio improved to 3.4 times adjusted EBITDA, aiming for a target of 3.0 times by 2027. This is a significant contrast to BCE, which had a net debt of 3.8 times its EBITDA by 2025.
While Telus currently maintains a dividend payout policy between 60-75% of free cash flow, there is speculation that management may consider halving dividends. Such a decision could yield substantial savings, potentially amounting to $1.3 billion, enabling further debt reduction.
Stock Recovery Potential
If Telus implements a dividend cut, similar to BCE’s past actions, experts suggest the stock could rebound by 20-25% within the first year. The priority for Telus management will likely focus on achieving a more sustainable leverage ratio to mitigate liquidity risks while enhancing revenue through its AI-driven initiatives.
Investment Outlook
As of now, Telus shares are trading near their multi-year lows. Investors are advised to be cognizant of the risks involved, including the potential for dividend cuts. However, with this strategic focus on debt management and revenue growth, Telus could see a revival in its stock price over the next three years.
In conclusion, while the journey ahead poses challenges for Telus, the steps taken in debt reduction and innovative revenue growth strategies could pave the way for a positive trajectory in its stock performance.
