■ Cut · August 22, 2026
Telus Cuts Dividend by 55%, Shifts Focus to Debt Reduction
Telus reduced its quarterly dividend by about 55% to $0.19 per share, pausing growth to prioritize debt reduction and financial flexibility.
Dividend Reduction and Strategic Shift
Telus (TSX:T) has historically been recognized as a reliable dividend payer on the TSX, with a track record of consistent increases. However, in 2025, the company paused its dividend growth and subsequently reduced its quarterly payout by approximately 55% to $0.19 per share. This significant cut marks a departure from its previous capital-allocation strategy, as management now prioritizes strengthening the balance sheet, reducing debt, and enhancing financial flexibility over dividend growth.
Financial Pressures and Performance
The dividend reduction comes amid growing pressure on Telus's earnings and cash flow. In December 2025, management suspended its dividend-growth program, maintaining the quarterly dividend at $0.42 per share, signaling increased caution. The company operates in a highly competitive Canadian telecommunications market, facing aggressive pricing, moderating population growth, and regulatory challenges that make profitable growth more difficult.
Telus's financial performance reflects these headwinds. Adjusted net income declined to $1.41 billion in 2025 from $1.55 billion in 2024, and the weakness continued into 2026, with adjusted net income falling 26% year over year in the second quarter. With earnings under pressure and elevated leverage, the dividend cut allows Telus to retain more cash to lower debt and strengthen its financial position.
Balance Sheet and Dividend Policy
At the end of the second quarter, Telus had net debt of approximately 3.5 times adjusted EBITDA, a relatively high leverage level for a company facing challenges. Management targets reducing leverage to roughly three times adjusted EBITDA or lower by the end of 2028. The lower payout is estimated to generate approximately $2.7 billion in savings through 2028, which can be used for debt reduction.
Telus has also adopted a more conservative dividend policy, targeting a payout ratio of 45% to 60% of trailing 12-month free cash flow, down from the previous 60% to 75%. This lower range appears more sustainable. The company is directing capital toward areas with stronger competitive advantages and higher return potential, while also monetizing non-core assets to generate additional funds for debt reduction. Continued customer growth and strong subscriber retention provide some stability to the core business, and lower capital spending should support free cash flow.
What it means for income investors
The 55% dividend cut represents a major shift in Telus's capital allocation, making the stock less attractive for those focused on growing income. However, the reset is designed to strengthen the balance sheet and support a more sustainable payout ratio, which may benefit long-term shareholders.
Reporting based on: Moomoo. Figures verified against market data where available.