A Canadian Dividend Stock Down 9% to Buy Forever

A dividend stock can look especially tempting when it drops, because you get paid to wait. The yield climbs as the share price falls, and that can turn a boring holding into a serious income producer. The trick is simple, though. You want a business that still generates dependable cash, even when the market mood turns sour. If the dividend depends on optimism, the bargain can vanish fast. So, let’s look at one offering a major opportunity.

T

TELUS (TSX:T) is one of Canada’s big telecoms. It sells wireless and internet services, and it also runs fast-growing side businesses in health and digital services. It has spent years pushing fibre internet across more neighbourhoods, while trying to turn health and digital into real profit engines instead of “nice stories.”

The share price has not been kind, and you can see why investors keep calling it “down.” TELUS stock has seen shares fall by about 10% in the last year. However, since highs, it’s down even further. That slump has a familiar cause.

Higher interest rates punish anything with heavy spending plans and meaningful debt, and telecoms sit right in that blast zone. TELUS has also dealt with pressure on wireless pricing and investor fatigue after years of big capital spending. The upside of that pain shows up in one place: income. TELUS right now offers up a dividend yield of 9.2%, offering major income for today’s investor.

Into earnings

Now for the proof that the business still throws off cash. In its third quarter of 2025, TELUS reported consolidated operating revenues and other income of $5.1 billion, and it generated free cash flow of $611 million, up 8% year over year. Management also said its net debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) leverage ratio improved to 3.5 times by quarter-end; thus, debt worries drive a lot of the stock’s mood swings.

Earnings looked mixed, which is exactly why the stock still feels unloved. TELUS reported net income of $431 million in Q3 2025, and it reported adjusted net income of $370 million. On a per-share basis, it showed basic earnings per share (EPS) of $0.32 and adjusted basic EPS of $0.24. It also lifted the quarterly dividend to $0.4184 per share, which matched the “keep paying, keep growing carefully” message investors have come to expect from it.

The near-term outlook got more honest in early December 2025, and I actually like that. TELUS set expectations for about $2.15 billion in free cash flow for 2025, and it gave a preliminary free cash flow target of $2.4 billion for 2026. It also said it will pause dividend growth for now, while continuing to pay the dividend at the current level. The dividend stock laid out a plan to step down its discounted dividend reinvestment program starting in 2026. That reads like a dividend stock that wants to get its balance sheet under control, not one that wants to win a popularity contest.

Bottom line

So, why call TELUS the dividend stock every investor should own while it’s down? Because the market already priced in a lot of the frustration, and you still get a hefty yield while the dividend stock works through its deleveraging plan. Right now, here’s what the dividend stock could earn from even $7,000.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTT$18.52378$1.67$631.26Quarterly$6,998.56

The risks stay real, though, especially debt, competition, and the fact that a high yield can signal stress. If you can handle some choppy months and you want income you can actually feel, TELUS at these levels makes a strong case.

The post A Canadian Dividend Stock Down 9% to Buy Forever appeared first on The Motley Fool Canada.

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More reading

• Maximum TFSA Impact: 3 TSX Stocks to Help Multiply Your Wealth
• Here Are My Top TSX Stocks to Buy for 2026
• This 9% Dividend Stock Is My Top Pick for Immediate Income
• BCE vs. Telus: Which TSX Dividend Stock Is a Better Buy in 2026?
• TFSA: 4 Canadian Stocks to Buy and Hold Forever

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.