When a stock loses nearly 50% of its value in a single year, most investors’ first instinct is to run the other way. But what if that same beaten-down name is not only an underappreciated AI innovator, but just raised its dividend by 10% and authorized a massive $600 million share buyback?
That is exactly the story unfolding with Thomson Reuters (TSX:TRI) right now.
Recently, the emergence of AI-powered legal tools from companies like Anthropic has spooked the market. Investors are increasingly worried that these new technologies could disrupt Thomson Reuters’ core legal information business, potentially leading to client attrition.
This anxiety has hit the stock hard. Over the past year, shares of TRI have been nearly cut in half, sliding from their highs to current levels.
But the critical question remains: Is the market overreacting to this threat?
While investors have been busy selling, Thomson Reuters hasn’t been standing still. The company boasts its own AI assistant, CoCounsel, and recently strengthened its technology stack by acquiring AI startup Noetica.
Unlike general-purpose AI tools, CoCounsel’s biggest advantage lies in its ecosystem—one built on years of trust and a deep repository of proprietary data. In the world of artificial intelligence, data is often a wider moat than the algorithm itself. Thomson Reuters’ vast archives of specialized legal and financial information represent a core competency that will be difficult for upstarts to replicate.
The sharp decline in share price has led to an unexpected silver lining: a significantly juicier dividend yield.
Thomson Reuters currently yields 2.61% , nearly double its historical average. Should the stock experience further weakness, that yield could potentially approach the 3% mark. To top it off, management recently announced a generous 10% increase to its quarterly dividend, signaling strong confidence in future cash flows.
For passive-income seekers navigating an environment of falling GIC rates and lackluster bond ETF returns, this kind of yield is increasingly rare. More importantly, unlike reaching for yield through risky covered-call ETFs or broken high-yield names, Thomson Reuters’ payout is backed by a resilient business model.
Perhaps the most telling sign of insider conviction is the newly authorized $600 million share buyback plan. When management chooses to repurchase shares aggressively during a downturn, it sends a clear message: they believe the stock is undervalued.
For those with a long-term horizon, the current entry point looks compelling. Through a dollar-cost averaging strategy, investors can build a position at a nearly 50% discount. If the stock dips further, there is even a chance to accumulate shares with a yield approaching 3%.
Opportunities to buy a company with robust data assets, proprietary AI capabilities, and a consistent dividend history at a reasonable price don’t come around often.
Market sentiment may remain choppy, and the AI competitive landscape is still evolving. But as history has repeatedly shown, selling quality assets during times of panic is often a decision investors later regret. For those willing to look past the near-term noise, Thomson Reuters today may very well be the “gold mine” they’ve been waiting for.
