TELUS Stock Hits New 12‑Month Low After BMO Downgrade — What a 9% Dividend and Deleveraging Plan Mean for Investors

Published: December 11, 2025

TELUS Corporation (TSX:T, NYSE:TU) is once again in the spotlight as its share price slides to fresh 12‑month lows just days after the telecom giant paused its long‑running dividend growth program and unveiled a new deleveraging strategy. For income investors, the stock now offers a dividend yield around 9–9.5%, but that yield comes with very visible questions about growth and balance‑sheet risk. ^[1]

Below is a look at the latest developments as of December 11, 2025, and how they tie together with the themes in recent analyst and investor commentary on TELUS.

BMO Downgrade Triggers New 12‑Month Low

Before the opening bell on December 11, BMO Capital Markets downgraded TELUS from Outperform to Market Perform and cut its 12‑month price target from C$23 to C$19. ^[2]

In its note, BMO highlighted several concerns: ^[3]

Valuation premium: Despite a steep share‑price pullback in recent months, BMO argues that TELUS still trades at a premium to other Canadian incumbent telecoms.
Uncertainty around TELUS Digital: The bank flagged limited visibility on growth and returns from TELUS Digital, the company’s customer‑experience and technology services arm, which is now wholly owned.
Dividend mechanics: The firm pointed to TELUS’s decision to phase out its discounted dividend reinvestment plan (DRIP) by 2028, as well as elevated payout ratios relative to peers.
Paused dividend growth: BMO explicitly noted that dividend growth has been paused, adding to its more cautious stance.

The downgrade landed on the same day TELUS shares began trading ex‑dividend for the company’s latest quarterly payout, intensifying selling pressure. According to intraday pricing data, the stock traded around C$17.75–C$17.88 on December 11, marking a new 12‑month low and a drop of roughly 3% on the day. ^[4]

MarketBeat issued multiple intraday alerts flagging TELUS hitting new 1‑year and 12‑month lows “following analyst downgrade,” underlining how closely the stock’s latest leg down is being tied to BMO’s call. ^[5]

A 9%+ Dividend — But Growth Is on Ice

Despite the price weakness, TELUS’s dividend remains very much intact for now.

From TELUS’s own investor‑relations site: ^[6]

The Q4 2025 dividend was set at C$0.4184 per share,
Record date: December 11, 2025
Payment date: January 2, 2026

CanadaStockChannel notes that the stock trades ex‑dividend on December 11 and that this quarterly dividend equates to roughly 2.26% of a recent C$18.54 share price, or an annualized yield just above 9%. ^[7]

With the share price now closer to the mid‑C$17 range, the forward yield has crept even higher, nearer to 9.3–9.4% on an annualized basis (C$0.4184 × 4 divided by the current share price). ^[8]

However, that big yield comes with an important asterisk: dividend growth is now paused.

On December 3, 2025, TELUS announced that it is halting its well‑known dividend growth program “until the TELUS share price better reflects TELUS’ growth prospects.” The company reiterated its long‑term payout ratio guideline of 60–75% of free cash flow, but made clear that future increases will depend on the board’s quarterly assessment of the company’s financial position and outlook. ^[9]

Multiple outlets, including MarketWatch, The Globe and Mail, and the Financial Post, reported that the dividend pause reflects a combination of share‑price weakness and mounting concerns about leverage, after years of capital‑intensive investments in fibre and 5G. ^[10]

In other words, TELUS is choosing to protect its balance sheet first and reward shareholders with a high absolute cash payout, rather than maintain a pre‑set pattern of dividend hikes.

New Free Cash Flow Targets and Deleveraging Plan

Dividend policy is only one part of a broader strategic reset. On December 3, TELUS also provided an updated mid‑term free cash flow (FCF) outlook and a more explicit deleveraging plan. ^[11]

Key elements from company and analyst summaries include: ^[12]

FCF growth: TELUS is targeting free cash flow of roughly C$2.15 billion in 2025, followed by annual FCF growth of around 10% through 2028, supported by moderating capital expenditures as major 5G and fibre buildouts peak.
Leverage reduction: Management aims to reduce its net‑debt‑to‑EBITDA ratio to about 3x by the end of 2027, down from higher levels that had drawn criticism from some analysts.
Capital allocation: In addition to pausing dividend increases, TELUS plans to step down its discounted DRIP starting in 2026, reducing equity issuance and shifting more of its cash generation toward debt reduction.

CIBC’s December 10 note, highlighted by MarketScreener and other feeds, focused on TELUS’s FCF growth and deleveraging strategy, underscoring that the new guidance gives investors a clearer line of sight on improving cash generation and balance‑sheet metrics, if management can execute. ^[13]

Some bullish analyst commentary — including TD Cowen’s reaffirmed Buy rating with a C$26 target — argues that the combination of higher future FCF, a still‑intact dividend, and a lower share price supports a “buy‑the‑dip” view for long‑term investors. ^[14]

Debt Tender Offers, Hybrid Notes and Credit Ratings

To support its deleveraging efforts, TELUS has been actively reworking its debt stack.

Hybrid subordinated notes

On December 10, TELUS closed an offering of U.S. dollar and Canadian dollar junior subordinated notes, raising the equivalent of roughly C$2.9 billion. These hybrid securities sit below senior debt but above equity in the capital structure and typically count as partial equity for rating‑agency metrics, helping issuers like TELUS maintain investment‑grade status while raising long‑term capital. ^[15]

Shortly thereafter, Morningstar DBRS assigned a BB (high) credit rating with a Stable trend to TELUS’s U.S.‑ and Canadian‑dollar subordinated notes. The agency confirmed that the company’s Issuer Rating and senior unsecured debt remain at BBB with Stable trends, indicating that the new hybrid issuance does not weaken TELUS’s overall credit profile. ^[16]

Cash tender offers for legacy notes

On December 4, TELUS launched cash tender offers for up to C$500 million (excluding accrued interest) of seven series of outstanding long‑dated notes, including multiple issues maturing between 2031 and 2051. The company has the flexibility to adjust the maximum purchase amount and the mix of notes it buys back. ^[17]

StockTitan and other outlets note that the tender offers are scheduled to expire on December 11, aligning with the ex‑dividend date and the finalization of the hybrid‑note financing. ^[18]

Together, the hybrid issuance and the tender offers illustrate how TELUS is trying to:

Push out maturities on a portion of its debt,
Retire some older, potentially higher‑coupon bonds, and
Preserve its investment‑grade rating while giving itself more runway to grow FCF.

AI and Digital Bets: Qohash Partnership Highlights Growth Ambitions

While much of the market’s focus is on debt and dividends, TELUS has also been leaning hard into AI and digital services, hoping to drive higher‑margin growth beyond traditional telecom.

On December 10, TELUS announced a strategic partnership with Qohash, a Canadian data‑security firm. Qohash’s patented Qostodian technology will be integrated into TELUS’s Fuel iX™ generative‑AI platform and into TELUS Digital’s AI‑powered customer‑service solutions. ^[19]

According to the company, the partnership will: ^[20]

Provide real‑time identification and classification of sensitive data across AI workflows,
Enable continuous monitoring and protection of data processed by Fuel iX, and
Support “secure‑by‑design” AI for highly regulated industries — aided by TELUS’s Sovereign AI Factory, branded as Canada’s fastest and most powerful supercomputer for AI workloads.

At the same time, BMO’s downgrade explicitly cited uncertainty about the outlook for TELUS Digital, highlighting a key tension: management is betting that AI, health, and other digital platforms will become growth engines, while some investors worry about execution risk and capital intensity in these newer segments. ^[21]

Social Impact News: Mobility for Good Expands in Manitoba

Not all of TELUS’s December 11 headlines are about markets.

The company also announced the expansion of its Mobility for Good for Indigenous Women at Risk program into Manitoba. In partnership with the Assembly of Manitoba Chiefs’ First Nations Family Advocate Office and Ka Ni Kanichihk, TELUS is providing free smartphones and wireless plans to Indigenous women and gender‑diverse people who may be at risk of violence. ^[22]

While this initiative doesn’t directly change the investment thesis, it reinforces TELUS’s longstanding strategy of positioning itself as a socially responsible, community‑focused telecom, something management often emphasizes when talking to ESG‑minded investors.

Analysts Remain Split on TELUS

The December 11 BMO downgrade adds another voice to an already divided analyst community: ^[23]

Bullish camp:
- TD Cowen maintains a Buy rating with a C$26 target, arguing that TELUS’s FCF guidance and strategic moves should support a re‑rating as the dust settles. ^[24]
- Canaccord Genuity and National Bank have recently upgraded TELUS to Buy/Outperform after the sell‑off, seeing the valuation as more attractive. ^[25]
Cautious to bearish camp:
- J.P. Morgan downgraded TELUS to Underweight in November, warning that the former dividend growth plan looked unsustainable given the company’s leverage and capex needs. ^[26]
- Bank of America has a Hold rating and recently trimmed its price target from C$22 to C$20, flagging elevated debt and a need for flawless execution on FCF. ^[27]
- BMO now sits firmly in the middle with a Market Perform call and a C$19 target, underscoring concerns about payout ratios and uncertainty in TELUS Digital. ^[28]

TipRanks and other aggregators still show TELUS with a “Moderate Buy” average rating, but the mix is increasingly polarized between high‑conviction bulls and skeptics focused on leverage and dividend risk. ^[29]

What Today’s News Means for Dividend Investors

Putting the pieces together, TELUS now sits at the intersection of three big themes:

High yield, no growth (for now):
- The dividend yield near 9–9.5% is undeniably attractive in a low‑growth world.
- However, growth in that dividend is on hold, and future increases depend on how quickly TELUS can grow FCF and cut leverage. ^[30]
Balance‑sheet repair in progress:
- Hybrid notes, tender offers, and explicit leverage targets show a clear focus on deleveraging.
- Credit agencies like Morningstar DBRS currently maintain investment‑grade ratings with Stable trends, suggesting no immediate credit crisis — but also little room for complacency if execution slips. ^[31]
Strategic upside vs. execution risk in digital and AI:
- Partnerships like Qohash and recognition for TELUS Digital’s customer‑experience services show that management is serious about building high‑growth, tech‑driven businesses. ^[32]
- At the same time, some analysts question whether these initiatives will deliver consistent, cash‑flow‑rich growth or simply add complexity and risk. ^[33]

For income‑oriented investors, the key question is not just whether the current dividend is safe in the next quarter or two, but whether TELUS can:

Hit its FCF growth targets,
Bring leverage down in line with its 3x goal, and
Demonstrate that digital and AI businesses can support — rather than strain — the balance sheet.

If management delivers, today’s lower share price and high yield could look like a long‑term entry point in hindsight. If FCF undershoots or the macro environment worsens, investors may eventually have to confront the possibility of a dividend cut rather than just a pause in growth.