What is the current state of Telus stock? As of now, Telus shares are trading at 16 times the projected earnings for 2027 and yielding over 10%. This high yield is attractive to investors, particularly those looking for income through dividends, but it also raises questions about the company’s financial health and future growth prospects.
To put this into perspective, an investment of 6,000 shares, costing approximately $98,700, would generate around $10,000 in annual dividend income. However, Telus’s financial landscape is complex. The company ended 2025 with over $27 billion in debt, resulting in a debt-to-total capitalization ratio exceeding 65%. This level of debt is concerning and has contributed to a significant decline in the stock price, which has fallen 50% from its 2022 highs and remains below $17.
Despite these challenges, Telus is focusing on growth areas, particularly in artificial intelligence (AI). The company’s AI data solutions, currently an $800 million business, are projected to expand to a $2 billion business by 2028. This potential growth is crucial for Telus as it seeks to diversify its revenue streams and mitigate risks associated with its high debt levels.
Analysts are cautiously optimistic, projecting an earnings per share (EPS) of $0.22 for the first quarter of 2026. Additionally, Telus has provided revenue growth guidance of 2-4% for the same year. The management has also committed to a debt reduction plan, which includes $7 billion in asset sales, aiming to reduce its leverage ratio to 3.0 times by 2027.
However, the stock’s performance remains volatile. In April 2026, Telus’s stock dipped more than 9% due to fears of a potential dividend cut. While the company has retained its dividend payout policy at 60-75% of free cash flow, the market remains wary. Some analysts suggest that if Telus were to make a bold move and cut its dividend, it could lead to a remarkable recovery of 20-25% in the stock price within the first year, similar to the recovery seen by BCE.
Telus’s management emphasizes the importance of pursuing high-growth areas such as Telus Health and its AI business. This strategic focus is aimed at improving the company’s overall financial stability and ensuring sustainable dividend payments in the future. Nevertheless, the exact impact of potential dividend cuts on stock price remains unclear, and the future performance of Telus’s AI data solutions and overall revenue growth is uncertain.
In summary, while Telus stock presents an attractive dividend yield, investors must consider the company’s significant debt and the potential risks associated with its financial strategy. As the market watches closely, the coming months will be crucial for Telus as it navigates these challenges and seeks to capitalize on its growth opportunities.
