None of that has changed. But the TSX dividend stock is down more than 60% from its peak.
The sell-off was brutal and, according to Morningstar, largely unwarranted. The research firm maintains its wide-moat rating on Thomson Reuters, calling Canadian stocks significantly undervalued at current levels.
That’s a strong statement, and there’s plenty of evidence to support it.
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Why is the TSX dividend stock down 60%
The fear driving the sell-off has two main causes.
First, Anthropic, the company behind the Claude artificial intelligence model, released a legal plugin in early February 2026 aimed at in-house legal teams. The announcement sent shares of Thomson Reuters down another 16% in one session.
Second, the broader market has been concerned over the past year that AI will completely disrupt the professional information market. That story has hung like a cloud over the shares since the summer of 2025.
This is what the market is missing.
The Claude plugin focuses on tasks such as contract reviews and legal briefings. As Morningstar noted, it has nothing to do with legal research, which is at the heart of what Thomson Reuters sells.
Westlaw’s deep, editorially enhanced library of legal content, built over decades by thousands of law editors, is not something a general AI model can replicate. The stakes of legal work are too high. Lawyers need to be right, and they need sources they can trust.
CEO Steve Hasker made this point during the company’s fourth-quarter 2025 earnings call. “Professional results cannot be delivered without this content and expertise,” he said. “General purpose models cannot meet this standard.”
The same moat also applies to the tax side. Thomson Reuters runs the tax calculation engines that accounting firms rely on twice a year. The switching costs are enormous, and new entrants have not yet made a breakthrough in that core market.
A strong performance in the fourth quarter
Here’s what makes this situation so unusual: the underlying company is actually performing well.
In the fourth quarter of 2025, Thomson Reuters reported organic revenue growth of 7% for the overall business and 9% for its three core segments, including Legal, Corporates and Tax, Audit and Accounting.
The full year adjusted profit margin before interest, taxes, depreciation and amortization (EBITDA) increased by 100 basis points to 39.2%. Free cash flow came to $1.95 billion, slightly above expectations.
For 2026, management expected organic revenue growth of 7.5% to 8%, with core segments growing approximately 9.5%. The EBITDA margin is expected to increase by another 100 basis points.
The company has also committed to the same level of margin expansion in 2027 and 2028. In short, Thomson Reuters is a company that is growing steadily and predictably.
And then there is the dividend. Thomson Reuters increased its annual payout by 10% to $2.62 per share. Today it offers shareholders a forward yield of 2.5%. Analysts predict the dividend will rise to nearly $3 per share by 2028.
Management also noted that it has approximately $11 billion of capital capacity through 2028 for dividends, share buybacks and acquisitions. Now that the TSX dividend stock has fallen sharply, buybacks are looking more and more attractive, and the board is taking notice.
The sell-off was driven by fear, not fundamentals. Thomson Reuters continues to deliver results and the dividend continues to grow.
Given consensus price targets, TSX stock is trading at a 69% discount in February 2026.
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