Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He graduated with a degree in Business Administration, has over a decade of writing experience, and grew his personal portfolio 153% from 2020 to 2024.
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The TELUS dividend cut announced Friday alongside second-quarter 2026 results reset the quarterly payout to $0.1875 per share, down from $0.4184 — a 55% reduction. Shares fell 11.9% to close at $13.28, touching an intraday low of $12.93, the lowest level in at least 52 weeks.
Why TELUS Cut the Dividend
The dividend reset centers on debt reduction. TELUS’s net debt stood at 3.5× adjusted EBITDA at the end of the second quarter. The company expects the dividend cut to preserve approximately $2.7 billion in cash through 2028, directed toward debt repayment. TELUS now targets net debt of approximately 3.0× or lower by year-end 2028, postponed from an earlier target of year-end 2027.
The second quarter produced a net loss attributable to common shares of $1,840 million, or $1.17 per share — driven by a $2.1 billion intangible-asset and goodwill impairment at TELUS Digital. Adjusted net income was $254 million, or $0.16 per share. Operating revenues reached $4,920 million and adjusted EBITDA was $1,777 million.
TELUS also cut 2026 guidance. The company now expects consolidated service revenue flat to down 2%, adjusted EBITDA down 2% to 4%, and free cash flow of approximately $1.8 billion. Capital expenditures are expected to be approximately $2.6 billion.
TELUS, now led by new CEO Victor Dodig, also launched a strategic portfolio review of TELUS Health non-core assets and real estate.
TELUS also lowered its dividend payout target to 45–60% of trailing 12-month free cash flow, down from 60–75%. The new dividend annualizes to $0.75 per share, down from $1.6736. The first payment at the new rate is scheduled for October 1, 2026.
What the Cut Means for Income Portfolios
The mathematics are straightforward. An investor holding 1,000 TELUS shares was collecting $1,673.60 per year in dividends. That income stream falls to $750 per year at the new rate — a reduction of $923.60 annually per 1,000 shares held.
For Canadian dividend portfolios concentrated in TELUS, Friday’s announcement represents a material income reduction. TELUS was a dividend stock staple for income-focused investors, particularly within TFSA and RRSP accounts where dividend income is sheltered from tax.
The stock price declined 11.9% on Friday in response. Volume reached 20.1 million shares versus an 8.6 million daily average. The broader S&P/TSX Composite closed Friday at 35,226.14, down 279.70 points or 0.79%.
The Bull and Bear Case
The bear case: TELUS cut dividend income by more than half. Guidance declined across revenue, EBITDA, and free cash flow. A $2.1 billion impairment at TELUS Digital signals business challenges, and the company’s own guidance — service revenue flat to down 2% — points to competitive pressure in Canadian telecom. Dividend investors who counted on TELUS for predictable income must now replace $923.60 per year per 1,000 shares from other sources.
The bull case: TELUS is strengthening its balance sheet. Lowering the payout target to 45–60% of trailing free cash flow, from 60–75%, creates headroom for reinvestment and makes the new dividend easier to sustain through sector volatility. Deleveraging to 3.0× net debt by 2028 reduces financial risk. We think dividend sustainability matters more than dividend size — a lower, sustainable dividend beats a high dividend that gets cut again. If TELUS executes the deleveraging plan and stabilizes operations, the stock could recover over time.
Customer metrics in Q2 showed some resilience: 17,000 mobile phone net additions and 20,000 internet net additions.
What Dividend Investors Should Do
Review your portfolio concentration. If TELUS represented a significant portion of your dividend income, assess whether other holdings can compensate for the reduction. Look at payout ratios and balance sheet strength across your dividend positions — not just TELUS — and revisit how the rest of the best Canadian stocks in your portfolio stack up on those measures. A dividend cut at one holding is a signal to audit the health of the entire income portfolio.
Investors holding TELUS inside registered accounts like a TFSA or RRSP should evaluate whether the stock still fits their long-term income strategy. No single stock decision should be made in isolation — dividend portfolio construction is about diversification across sectors, payout ratios, and business models.
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Frequently Asked Questions
When does the new TELUS dividend rate take effect? The first payment at the new quarterly rate of $0.1875 per share is scheduled for October 1, 2026.
What is TELUS’s new annual dividend? The new quarterly dividend of $0.1875 per share annualizes to $0.75 per share, down from the previous annualized rate of $1.6736 per share.
Why did TELUS cut its dividend? TELUS cut its dividend to preserve approximately $2.7 billion in cash through 2028, directed toward debt repayment. The company’s net debt stood at 3.5× adjusted EBITDA at the end of Q2 2026 and targets approximately 3.0× or lower by year-end 2028.
Data as of July 31, 2026 market close.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions.
Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He holds a degree in Business Administration and has over a decade of writing experience. Nick began investing just before the COVID-19 market crash in March 2020, growing his personal portfolio 153% by 2024. In 2022, he founded Best Canadian Stocks to make data-driven investing accessible to all Canadians. His goal is to help all of his readers achieve financial freedom, maximize their spending power, and reach their financial goals. Whether you're maximizing your TFSA, building an RRSP to save for retirement, or looking to buy your first stock, Nick has your back. His work covers Canadian equities, dividend investing, tax-advantaged accounts, and personal finance.
