The 9% Yield No One Trusts — And Why Telus Might Be the Contrarian Buy of 2026

There is a particular kind of investor frustration that comes not from losing money, but from watching a stock sit perfectly still while the rest of the market dances. You bought it for the dividend. You told yourself the yield was too good to ignore. And then, quarter after quarter, the price drifts sideways or slowly lower, and the thesis begins to feel less like a strategy and more like a sentence. But sometimes — not always, but sometimes — patience is exactly what the market is underpricing. The latest high-yield dividend screen has surfaced four names that deserve more than a passing glance. My Highlight for today: TELUS Corporation (Opens in a new window)*.

High-Yield Dividend Screen

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There is a version of this story where Telus turns out to be one of the most obvious dividend opportunities hiding in plain sight. There is another version where it becomes the cautionary tale income investors tell each other for the next decade. The gap between those two outcomes is narrower than the headlines suggest — and it all hinges on a single, unsexy word: execution. TELUS Corporation (NYSE: TU (Opens in a new window)*) is currently offering a dividend yield approaching 9%, a number that in a normal market environment would trigger a stampede of buyers. Instead, the stock sits quietly near multi-year lows, and the skeptics are louder than the bulls. Here is the full picture — the good, the bad, and the genuinely uncertain.

Company Overview

TELUS is a global communications technology company generating more than $20 billion in annual revenue and serving over 21 million customer connections across more than 45 countries. Its core wireless and fibre broadband businesses form the foundation, but the company has spent years building diversified revenue streams through TELUS Health, TELUS Agriculture, and TELUS Digital — divisions that now collectively represent a meaningful slice of total revenue. Telus has replaced most of its legacy copper network with fibre, significantly upgrading the quality of its services, and has achieved years of mid-single-digit fixed-line sales growth and margin expansion as a result.

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Key Recent Developments

The financial press has been focused on two things with Telus in recent months: the leadership transition and the dividend freeze. On the CEO front, long-serving chief executive Darren Entwistle, who built the company over 26 years, is stepping down on June 30, 2026. The succession question is not trivial — leadership changes at capital-heavy, dividend-reliant businesses always create uncertainty, and the timing adds an extra layer of complexity to an already sensitive balance sheet story.

On the dividend, Telus announced in December 2025 its intention to pause its dividend growth program until the share price better reflects the company's growth prospects. That pause, while technically not a cut, rattled income investors who had come to rely on the semi-annual increase cadence. The annual dividend expense exceeds $2.5 billion, indicating a payout ratio of over 100% based on reported earnings. That figure sounds alarming on the surface — but as every seasoned telecom analyst will point out, the more relevant metric is free cash flow, where the picture looks considerably healthier. On a cash-flow basis, the payout ratio sits at roughly 45%, which is far more manageable.

Separately, a cybersecurity incident emerged in mid-March 2026, with Telus investigating a breach claimed by the ShinyHunters group — a development the market will be watching closely for any reputational or operational fallout.

The Company's Competitive Moat

Telus's moat is infrastructure. You cannot build a national fibre and wireless network in a weekend, and you cannot replicate 26 years of customer relationships with a marketing campaign. Telus holds roughly 30% of the Canadian mobile subscriber market as one of the country's three dominant wireless carriers, with a particularly strong position as the incumbent provider in British Columbia and Alberta. Postpaid churn remains below 1%, which underscores a sticky customer base and the strength of its network-plus-service bundle. That kind of retention figure is genuinely difficult to achieve and even harder to sustain.

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Deep Analysis

The strengths of Telus are real and compounding. The fibre network is built, the investment cycle is peaking, and the Health division is growing fast — TELUS Health grew its sales by 18% and adjusted EBITDA by 24% in its most recent reporting quarter, a growth rate that would attract premium valuations in any other context. Free cash flow is rising, with management targeting $2.4 billion in 2026 free cash flow against $2.3 billion in infrastructure spending — a cross-over point that marks the beginning of genuine financial flexibility.

The weaknesses are also real. The balance sheet carries elevated debt from the infrastructure build-out years, and management is targeting a net-debt-to-EBITDA of approximately 3.3 times by year-end 2026, down from a level that has made fixed-income markets nervous. The deleverage story is the thesis — and it requires operational consistency with very little room for error. Any revenue shortfall, capex overrun, or unexpected macro deterioration makes the math tight.

The opportunity is clear and time-sensitive. Capital spending is rolling off, free cash flow is rising, and the Health division could one day command a standalone valuation that the current share price does not remotely reflect. The threat is equally clear: Quebecor's push to become a national wireless competitor is weighing on pricing power, and the new CEO will need to demonstrate balance sheet discipline from day one.

Current Valuation

Telus stock is down almost 50% from its all-time high, which is a remarkable figure for a regulated, cash-generating telecom. Morningstar assigns a fair value estimate of CA$25.00 per share against a current price near CA$18.40 — implying roughly 35% upside before dividends. Analyst consensus forecasts a 27% gain, and with dividends included, cumulative returns could approach 37% over the next twelve months. The valuation is genuinely cheap by almost any measure. The risk is that cheap can stay cheap, or get cheaper, if the deleverage plan slips.

Conclusion

Telus is not a comfortable stock. The dividend freeze unsettles income investors. The debt load unsettles value investors. The CEO transition unsettles everyone else. But discomfort and danger are not the same thing, and the case here is ultimately simple: if Telus hits its free cash flow and deleverage targets over the next 24 months, investors buying near current prices will look very smart in hindsight. If it doesn't, the downside is real. This is a stock for patient, research-driven investors — not for those who need the story to be clean.

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