1 Canadian Dividend Stock Down 20% to Buy and Hold Forever

2026-02-19 15:30:00 ET

Buying a dividend stock when it’s down can feel a little backwards, which is exactly why it sometimes works. The yield rises as the share price falls, so you get paid more cash flow for every dollar you put in. If the business stays solid, that higher yield can juice long-term returns, especially in a Tax-Free Savings Account ( TFSA ) where you can reinvest dividends without tax friction. The catch is simple: a falling price can also signal real problems, so the job is to separate a temporarily disliked stock from a permanently damaged one. So, where does this telecom sit?

T

TELUS ( TSX:T ) is one of Canada’s big telecoms, making its money by selling wireless and internet services, plus overseeing a growing health and digital services footprint. It tends to appeal to investors who want steady service revenue, a big customer base, and a dividend that shows up like clockwork.

Over the last year, TELUS stock dealt with two challenges that can weigh on the share price even when operations look fine. First, investors have remained picky about anything with heavy capital spending and meaningful debt, as higher interest rates make leverage feel less comfortable. Second, the Canadian wireless market has stayed intensely competitive, which can pressure pricing and slow the pace of average revenue per user improvements.

The more upbeat news came from the company’s own updates, which leaned hard on customer growth, cost discipline, and a focus on cash flow. In its fourth-quarter and full-year 2025 release, TELUS stock highlighted strong net additions, including 377,000 total mobile and fixed customer additions in Q4, and it framed that demand as proof that its bundled services still resonate. The company also set 2026 targets that point to a steadier year, rather than a white-knuckle one.

Earnings support

In Q4 2025, TELUS stock reported consolidated operating revenues and other income of $5.3 billion, slightly lower than the prior year’s $5.4 billion, but it said service revenue grew 1%, and the decline came from lower equipment revenue and other income. In short, it sold fewer devices, but the core subscription engine kept moving.

For the full year, TELUS stock pointed to a record $2.2 billion in consolidated free cash flow, up 11% versus the prior year, and cash from operations of $4.9 billion. That free cash flow line is the one dividend investors should circle, as it speaks to how comfortably the company can fund payouts while still investing in the network. TELUS stock also flagged net debt to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) at 3.4 times at the end of 2025, setting a target to keep deleveraging over the next couple of years.

Looking ahead, TELUS stock laid out 2026 targets that read like a “stabilize and grow” plan. It aims for consolidated service revenues and adjusted EBITDA growth of 2% to 4%, capital expenditures of about $2.3 billion, and consolidated free cash flow of about $2.5 billion, which it described as roughly 10% growth. If it hits those numbers, the narrative can shift from “heavy spender” to “cash-flow compounding machine,” which tends to help valuation. Meanwhile, it still offers a dividend yield of 9% while trading at 26 times earnings, which could bring in ample income from a $15,000 investment.

Bottom line

So, could TELUS stock be a buy for others while it is down? It could, if someone wants a classic Canadian dividend name, can handle share-price boredom, and cares more about cash flow than bragging rights. The bull case rests on improving cash generation, clear deleveraging goals, and the simple fact that Canadians keep paying their phone and internet bills. The bear case is also real. The payout looks stretched on simple screens, competition can mess with pricing, and debt stays a constraint until leverage keeps trending down.

The post 1 Canadian Dividend Stock Down 20% to Buy and Hold Forever appeared first on The Motley Fool Canada .

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 .

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