Telus Stock Slides After Slashing Dividend by 55% and Lowering Guidance

Shares of Telus (NYSE: TU) plunged in pre-market trading after the Canadian telecommunications company announced a significant dividend reduction and a downward revision to its full-year guidance as part of its second-quarter 2026 financial results.

The stock fell 8.3% in pre-open trading as investors reacted to the strategic shift, which prioritizes debt reduction over shareholder payouts.

Dividend Reset and Debt Reduction

Telus declared a new quarterly dividend of C$0.1875 per share, a 55% reduction from the previous payment of C$0.4184. The company stated this move is expected to generate approximately C$2.7 billion in cumulative cash savings through 2028, which will be directed toward debt repayment.

Management is targeting a reduction in its net debt to Adjusted EBITDA ratio from 3.5 times at the end of the quarter to approximately 3.0 times or lower by the end of 2028. Alongside the dividend cut, Telus also announced it would eliminate the discount on its dividend reinvestment plan, effective October 1, 2026.

Lowered Outlook and New Strategy

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The company also revised its full-year 2026 consolidated service revenue guidance to a range of flat to negative 2%, a notable downgrade from prior expectations. The financial updates came as incoming CEO Victor Dodig outlined new strategic priorities focused on strengthening the company's financial foundation and improving operational discipline.

The sharp pre-market sell-off pushed the stock price toward the lower end of its 52-week range, reflecting a swift repricing by the market as income-focused investors recalibrated their expectations. The decline was specific to Telus, as the broader S&P 500 and Nasdaq indices were trading higher.

Sector-Wide Headwinds

While the magnitude of the dividend cut surprised the market, concerns about its sustainability had been mounting for months. Analysts had previously highlighted a mismatch between Telus's free cash flow generation and its dividend payout level.

The Canadian telecommunications sector has been navigating significant challenges, including slowing subscriber growth, high capital expenditure requirements, and persistent competition. The move by Telus follows a similar dividend cut by sector peer BCE, signaling ongoing pressure across the industry.