■ Cut · July 31, 2026
TELUS Cuts Dividend 55%, Targets Leverage Below 3.0x by 2028
TELUS resets its quarterly dividend to $0.1875, removes DRIP discount, and updates leverage target to 3.0x by 2028.
Dividend Reset and Financial Strategy
TELUS Corporation (TSX: T) (NYSE: TU) announced a significant reduction in its quarterly dividend as part of a broader strategy to strengthen its balance sheet and position the company for long-term growth. The Board of Directors declared a quarterly dividend of $0.1875 per share, payable on October 1, 2026, to shareholders of record as of September 10, 2026. This represents a 55% reset from the previous annualized dividend of $1.6736 per share to $0.75 per share. The move is expected to generate approximately $2.7 billion in cumulative cash savings through 2028, which will be directed toward debt reduction.
In addition to the dividend reset, TELUS will eliminate the discount on its dividend reinvestment plan (DRIP) effective October 1, 2026. This change reduces shareholder dilution and aligns with the company's capital allocation priorities. Shareholders currently enrolled in the DRIP do not need to take any action; dividends will continue to be reinvested automatically under the revised terms.
Leverage and Free Cash Flow Targets
TELUS has updated its leverage target, now aiming for net debt to Adjusted EBITDA of 3.0 times or lower by year-end 2028, a revision from the previous target of year-end 2027. The extended timeline reflects competitive pricing pressure and reduced subscriber demand due to lower population growth, which have impacted organic free cash flow generation. The company expects leverage to decline sequentially in 2027 and 2028, supported by organic free cash flow growth, declining capital intensity, and proceeds from strategic portfolio reviews.
The company also revised its free cash flow dividend payout ratio target to a range of 45% to 60% of trailing 12-month free cash flow, down from the previous range of 60% to 75%. This change underscores TELUS' commitment to maintaining a sustainable payout while prioritizing balance sheet strength.
Strategic Priorities and Portfolio Review
TELUS outlined three near-term strategic priorities focused on strengthening its financial foundation, sharpening operational focus, and concentrating resources on high-growth opportunities. The company is conducting a comprehensive review of its asset portfolio, including non-core TELUS Health assets and real estate, with proceeds directed toward debt reduction. These initiatives are expected to further support deleveraging and long-term financial objectives.
In the second quarter of 2026, TELUS reported consolidated operating revenues and other income of $4.9 billion, down from $5.1 billion in the prior year. The decline was driven by a 1% decrease in consolidated service revenue, lower mobile equipment revenue, and reduced other income. Key factors included lower external revenues in TELUS Digital and a decelerating decline in mobile phone ARPU.
What it means for income investors
The dividend reset reflects TELUS' focus on deleveraging and long-term growth, but it results in a significantly lower yield for current shareholders. The company's revised payout ratio and leverage targets indicate a more conservative capital allocation approach, which may appeal to investors seeking stability over high income. However, the reduced dividend may not suit those relying on current income.
Reporting based on: PR Newswire. Figures verified against market data where available.