Thomson Reuters (TSX:TRI) has spent greater than a century constructing one of the crucial defensible companies on the planet. It owns the authorized analysis platform Westlaw, the main tax calculation engines utilized by accountants worldwide, and a collection of AI-powered instruments gaining actual traction with professionals.
None of that has modified. However the TSX dividend inventory is down over 60% from its peak.
The sell-off has been brutal and, in response to Morningstar, largely unjustified. The analysis agency maintains its wide-moat ranking on Thomson Reuters and calls the Canadian inventory considerably undervalued at present ranges.
That’s a powerful assertion, and there’s loads of proof to again it up.
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Why is the TSX dividend inventory down 60%
The worry driving the sell-off has two predominant sources.
First, Anthropic, the corporate behind the Claude synthetic intelligence mannequin, launched a authorized plug-in in early February 2026 concentrating on in-house authorized groups. The announcement despatched Thomson Reuters shares down one other 16% in a single session.
Second, the broader market has spent the previous yr worrying that AI will disrupt the skilled data market solely. That narrative has hung over the inventory like a cloud since summer season 2025.
Right here’s what the market is lacking.
The Claude plug-in targets duties like contract opinions and authorized briefings. As Morningstar famous, it has nothing to do with authorized analysis, which is the core of what Thomson Reuters sells.
Westlaw’s deep, editorially enhanced authorized content material library, constructed over many years by hundreds of lawyer editors, will not be one thing a common AI mannequin can replicate. The stakes in authorized work are too excessive. Attorneys must be proper, and so they want sources they will belief.
CEO Steve Hasker made this level clearly throughout the firm’s fourth-quarter 2025 earnings name. “Skilled-grade outcomes can’t be delivered with out this content material and experience,” he stated. “Basic function fashions can’t meet this commonplace.”
That very same moat applies to the tax aspect as nicely. Thomson Reuters runs the tax calculation engines that accounting companies depend on twice a yr, yearly. Switching prices are huge, and new entrants haven’t made inroads into that core market.
A robust This fall efficiency
Right here’s what makes this case so uncommon: the underlying enterprise is definitely performing nicely.
In This fall 2025, Thomson Reuters reported natural income progress of seven% for the overall firm and 9% for its three core segments, which embody Authorized, Corporates, and Tax, Audit and Accounting.
Full-year adjusted earnings earlier than curiosity, taxes, depreciation, and amortization (EBITDA) margin expanded 100 foundation factors to 39.2%. Free money stream got here in at US$1.95 billion, barely forward of expectations.
For 2026, administration guided for natural income progress of seven.5% to eight%, with the core segments rising at roughly 9.5%. EBITDA margin is anticipated to increase one other 100 foundation factors.
The corporate additionally dedicated to that very same degree of margin enlargement in 2027 and 2028. Principally, Thomson Reuters is a enterprise compounding steadily and predictably.
After which there’s the dividend. Thomson Reuters raised its annual payout by 10% to US$2.62 per share. At the moment, it provides shareholders a ahead yield of two.5%. Analysts forecast the dividend to extend to virtually US$3 per share in 2028.
Administration additionally famous it has roughly US$11 billion in capital capability by 2028 for dividends, share buybacks, and acquisitions. With the TSX dividend inventory down sharply, buybacks look more and more enticing, and the board is taking discover.
The sell-off has been pushed by worry, not fundamentals. Thomson Reuters continues to ship, and the dividend retains rising.
Given consensus value targets, the TSX inventory trades at a 69% low cost in February 2026.