A Canadian Dividend Pick Down 22%: A Forever Hold

Canada’s big telecom stocks are traditionally known for their stable business models and reliable dividends. In recent years, however, that view has changed for one of the sector’s biggest names. What was once a top Canadian dividend pick is now being questioned by investors for its sustainability going forward.

That Canadian dividend stock is Telus (TSX:T), and with the trailing 12-month period showing a 22% decline in the stock price, that question is justified.

Let’s see whether, after that decline, Telus still belongs in your portfolio.

Telus at a glance

Telus is one of Canada’s big telecom stocks. The company provides telecom services across wireless, wireline, TV and internet to subscribers across the country.

Traditional telecom services are defensive segments that continue to generate a stable revenue stream. But that core telecom subscriber business is just one of three key strengths that the telecom offers.

The other two include Telus’ growing list of businesses that include Telus Health, Telus Digital, and Telus Agriculture & Consumer Goods.

Perhaps most importantly for investors, that third lever is the quarterly dividend that Telus offers.

Why is Telus down 22% over the past year?

Given Telus’ superb business model and growth in the digital services field, the question remains: Why is the stock down so much over the past year?

The decline isn’t tied to one factor, but rather a combination of factors.

First, telecom companies like Telus are capital-intensive businesses that require huge investments to keep networks competitive. When interest began to rise several years ago, this put pressure on Telus’ balance sheet. That also led to many investors rotating out of the telecom and into higher-growth picks.

The squeeze on Telus’ results was clear in the company’s Q1 2026 results earlier this year. In that quarter, Telus saw net income drop 52% year-over-year to $144 million. That squeeze happened while fierce competition picked up. In that same quarter, Telus saw its mobile churn rate increase to 1.4%.

That’s not to say Telus isn’t still growing, but more that growth has become more challenging.

Dividend appeal

As the stock price retreated, Telus’ dividend yield rose. As of the time of writing, Telus offers a yield of 9.6%. That’s one of the highest yields on the market and unusually high for a Telecom.

Prospective investors should note that the yield is more a reflection of short-term concerns rather than a structural shift. Telus’ core subscription and digital services arms continue to grow. The telecom moved to pause its dividend growth program recently, but has so far resisted the urge to slash its dividend yield.

Telus is prioritizing efforts on lowering its debt, and that comes at the cost of Telus’s history of providing dividend increases.

Why Telus still fits a long‑term dividend strategy

For long‑term dividend investors, Telus still checks all of the boxes that matter. The telecom has a long history of dividend payments, supported by its subscription revenue and attractive churn numbers.

Telecom services are essential, and Telus benefits from those predictable monthly bills.

Beyond its core telecom business, Telus has developed several growth platforms, including Telus Digital, Telus Health, and Telus Agriculture & Consumer Goods. These businesses broaden the company’s reach beyond traditional telecom services while creating new revenue streams.

Finally, Telus’s fibre build‑out also positions the company towards long‑term growth. As more households demand faster and more reliable internet, Telus’ network investments should translate into stronger customer satisfaction and reduced churn.

The bottom line

No stock is without risk, and that includes otherwise defensive stocks like Telus. Fortunately, despite Telus’ 22% decline, the Canadian dividend stock still offers a compelling case for investors.

The defensive core business, growth-focused business segments, and high-yield all appeal to different investors.

In my opinion, Telus should form a smaller position in any larger, well-diversified portfolio.

The post A Canadian Dividend Pick Down 22%: A Forever Hold appeared first on The Motley Fool Canada.

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More reading

• 1 Canadian Dividend Stock Down 23% to Buy Now and Hold for Years
• 2 Dividend Giants That Look Attractive After Recent Pullbacks
• BCE vs. TELUS: 1 Stock Stands Out for TFSA Investors Right Now
• BCE or Telus: Which TSX Dividend Stock Is a Better Buy in 2026?
• Forget Telus: A Cheaper Dividend Stock With More Growth Potential

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