1 Discounted Canadian Dividend Stock Down 16% That’s Worth Buying Now

Buying high-quality dividend stocks during pullbacks can be a smart way to boost your long-term returns. When share prices decline, dividend yields often rise, giving investors an opportunity to lock in attractive income streams while positioning themselves for potential capital gains.

While Canada’s broader stock market has continued to climb, bargain opportunities have become increasingly difficult to find. That’s why investors should pay close attention when a fundamentally strong dividend stock trades at a meaningful discount.

Nonetheless, one Canadian dividend stock has fallen 16% over the past year. For long-term investors seeking reliable income and upside potential, this TSX stock is worth buying.

An attractive dividend stock to buy now

Investors looking for attractive income opportunities could consider Telus (TSX:T). The Canadian telecommunications giant has seen its share price decline by more than 16%, creating a compelling entry point for long-term investors. As a result of this pullback, Telus now offers a dividend yield of more than 9.7%, making it one of the highest-yielding dividend stocks on the TSX.

The stock came under pressure after management announced a pause in its dividend growth program. While Telus maintained its quarterly dividend at $0.42 per share, the decision to suspend future dividend increases disappointed the market and raised questions about the sustainability of its payouts.

Despite these concerns, Telus has a proven history of rewarding shareholders. Over the years, the company has consistently returned substantial cash through dividends and share repurchases. Since 2004, Telus has returned about $25 billion in dividends.

For income-focused investors, the recent share price weakness could present an opportunity to lock in a high yield from a company with a long track record of returning capital to shareholders.

Telus’s growth strategy and improving balance sheet support a bullish outlook

Telus is focusing on strengthening its business and balance sheet, which is likely to support future growth. Further, the company could continue to reward shareholders with regular payouts despite near-term operational and macroeconomic pressures.

Telus continues to grow its customer base, retain subscribers at high rates, and generate solid free cash flow. At the same time, management remains focused on reducing debt while benefiting from declining capital expenditure requirements. These trends should improve financial flexibility and support long-term shareholder returns.

5G+ and AI driving growth

Telus’ growth is likely to be driven by its investments in PureFibre and 5G+, which strengthen its competitive position and support future subscriber growth. Investments in artificial intelligence (AI) and a focus on attracting higher-value customers also provide opportunities for revenue growth and margin expansion.

The telecom company’s first-quarter 2026 results highlighted the resilience of its business, with the addition of 262,000 mobile and fixed customers driven by continued demand for premium bundled services. Management expects free cash flow to grow at a compound annual rate of at least 10% through 2028, supported by higher EBITDA, lower capital spending, and operational efficiencies. This growth is expected to fund both dividend payments and ongoing debt reduction, with leverage targeted at 3.3 times or lower by the end of 2026 and 3 times or better by the end of 2027.

Beyond telecommunications, Telus is expanding its growth platform through healthcare and digital services. TELUS Health continues to deliver steady revenue and EBITDA growth, while Telus Digital is benefiting from rising demand for AI-related services, with AI-driven revenue increasing 22% year over year in the first quarter.

Overall, Telus’s growing subscriber base, diversified business mix, strengthening cash flow, and improving balance sheet support a positive long-term outlook.

The post 1 Discounted Canadian Dividend Stock Down 16% That’s Worth Buying Now appeared first on The Motley Fool Canada.

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More reading

• How to Convert $25,000 in TFSA Savings Into Reliable Cash Flow
• Where Could Telus Stock Be in 3 Years?
• BCE or Telus: Which TSX Dividend Stock Is a Better Buy Now?
• What’s the Deal With Telus’s Dividend?
• How to Turn a $14,000 TFSA Into a Cash-Generating Machine

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