When a stock drops 25%, the market starts whispering “value trap.” When another plunges nearly 10% in a single day over dividend fears, investors rush to hit sell. That’s exactly what’s happening with Canadian National Railway (CRN) and Telus (T) right now.
The question is: is the market being too quick to write off these two infrastructure giants?
CNR’s share price has fallen about 25% since March 2024. The surface reasons are clear: freight volumes have dropped. In 2024, labour disputes, port strikes and severe weather hit operations. Then came 2025, with US tariffs on petroleum products, steel, aluminum and lumber, escalating trade tensions and testing investor patience – so much so that CNR abandoned its medium-term growth outlook.
Sounds like a troubled company, right?
But if you only watch the share price, you’ll miss another story: CNR hasn’t sat still. Management quickly pivoted to efficiency – tightening costs, improving asset utilisation, and boosting locomotive productivity. The result? In 2025, despite lower freight volumes in metals and forest products, higher volumes in agriculture and intermodal transport helped the company deliver 1% revenue growth and 8% earnings per share growth.
More importantly, CNR just raised its 2026 dividend by 3%, and its current dividend payout ratio (based on free cash flow) sits at a very comfortable 66%. The company expects flat revenue for 2026 – no high growth, but no collapse either.
The core of the contrarian argument: the government is pushing to diversify export markets by building new ports, airports and railway infrastructure. That transition will lift freight volumes over the medium term. Patient investors in CNR not only collect an annual dividend of C$3.66 per share but also stand to benefit from a valuation recovery.
If CNR is being bruised by trade tensions, Telus is going through a market psychology “self-fulfilling prophecy.”
Telus shares have fallen about 25% over the past year, and recently dropped as much as 9.8% in a single day over fears of a possible dividend cut. In December 2025, the company paused its dividend growth – the stock fell over 12% at that time. Its current dividend payout ratio (including the DRIP) stands at a lofty 110%, and its balance sheet is indeed under pressure.
But doesn’t this feel familiar? In May 2025, when BCE announced a dividend cut, its stock actually surged 20% . The market logic is simple: once the “landmine” of the dividend is finally triggered, uncertainty clears and the stock bottoms out.
Telus management has already laid out a clear plan: reduce net debt to 3x adjusted EBITDA, and grow free cash flow at an average annual rate of 10%. Even including the DRIP, the payout ratio is expected to return to 100% by 2027.
In other words, the worst‑case scenario is that Telus follows BCE’s path – cuts the dividend, then starts a repair rally. For value investors, the moment the market “writes off” Telus out of fear may actually be the window to buy.
CNR and Telus operate in different industries, but the reasons the market is dumping them are strikingly similar: high capital spending, slowing revenue growth, and profits driven by cost cuts. Yes, those are weaknesses. But the market often forgets the other side – their economic moats have been built with time and money that no new entrant can easily replicate.
CNR owns a railway network spanning the North American continent. Telus owns vast fibre and wireless infrastructure with replacement costs running into tens of billions of dollars. When the macro dust settles, CNR will emerge more efficient, and Telus will stand with a healthier balance sheet and more financial flexibility.
To be clear: being contrarian doesn’t mean buying with your eyes closed. CNR still faces ongoing trade policy uncertainty, and Telus’s dividend decision remains unresolved.
But if you agree with two things:
Then the current pullback in CNR and Telus looks less like a trap and more like a discounted entry ticket for the patient. As one Toronto‑based fund manager put it privately: “When the market writes them off, that’s exactly the time we turn the page.”
