1 TSX Dividend Stock Down 20% to Buy Now

The TSX has several high-quality dividend payers with a long track record of rewarding shareholders through resilient and growing distributions. Among these top dividend stocks, Telus (TSX:T) stood out for its solid dividend payments over the years.

Since 2004, Telus has returned roughly $30 billion to investors through dividends and share buybacks. Of that total, approximately $25 billion was paid out in dividends, while about $5.3 billion was used to repurchase shares.

Despite this impressive track record, shares of this leading telecommunications company have come under pressure, falling more than 20% from the 52-week high.

What’s behind the decline in Telus stock

The weakness in this TSX stock reflects concerns about Canada’s increasingly competitive telecom landscape. Aggressive pricing strategies across the industry are pressuring margins and weighing on near-term earnings growth.

Telus’ dividend policy has also played a key role in the stock’s decline. In May 2025, Telus reaffirmed its commitment to dividend growth, outlining plans for semi-annual increases and targeting annual dividend growth of 3% to 8% between 2026 and 2028.

However, on December 3, 2025, Telus announced a pause in its dividend growth program. While the company maintained its quarterly dividend at $0.4184 per share, the decision to halt further increases weighed on the stock price.

Management stated that the move will help strengthen the balance sheet and reduce its net debt-to-EBITDA leverage ratio to roughly three times by the end of 2027. However, investors appear wary that heightened competition could limit Telus’s ability to generate the steady earnings expansion that has historically supported both capital returns and dividend growth.

Here’s why to buy this TSX dividend stock

While the decision to pause dividend growth has weighed on the company’s stock price, the move to deleverage the balance sheet enhances financial flexibility and positions Telus for more sustainable long-term growth.

The broader operating backdrop remains challenging. Competition across Canada’s telecom sector has intensified, particularly in wireless. To defend market share and support customer retention, Telus has adjusted pricing in its Mobile segment. That strategy has compressed margins and weighed on earnings in the short term. Thus, strengthening the balance sheet and enhancing financial flexibility positions it to deliver durable growth.

At the same time, Telus’s fundamentals remain intact. Telus continues to benefit from its extensive wireless infrastructure and expanding PureFibre network, which supports subscriber growth. Further, its bundled service offerings are helping deepen customer relationships and reduce churn.

Further, Telus is emphasizing higher-quality, more profitable subscriber additions rather than pursuing aggressive volume growth. Over time, this focus should help restore margin stability. It is tightening costs and improving efficiency. At the same time, its health segment is contributing meaningfully to its growth, diversifying its income streams.

The company’s capital expenditures are expected to moderate following several years of elevated network investment. As spending declines, free cash flow generation should improve. Stronger free cash flow and ongoing asset monetization initiatives will accelerate debt reduction and further strengthen the balance sheet.

Looking ahead, its high-quality network, an expanding fibre footprint, growing subscriber base, and focus on deleveraging the balance sheet augur well for growth.

Even with dividend growth paused, the current annual dividend yields roughly 9%. For income-oriented investors willing to tolerate near-term volatility, the recent share price pullback and high yield present an attractive entry point.

The post 1 TSX Dividend Stock Down 20% to Buy Now appeared first on The Motley Fool Canada.

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More reading

• The Best TSX Stocks to Buy Now if You Want Both Income and Growth
• How to Make Money in a TFSA With Dividend Stocks
• 1 Canadian Dividend Stock Down 20% to Buy and Hold Forever
• 2 Dividend Stocks to Double Up on Right Now
• 1 Dividend Great I’d Buy Over Telus or BCE Stock Today

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.