A 34% Drop Makes This Dividend Giant a Must-Watch Buy-and-Hold Stock
When searching for the ideal dividend stock, most investors focus on yield — but true long-term value comes from a mix of income and growth. Right now, BCE Inc. (TSX:BCE) is offering exactly that, even if it’s flying under the radar.
Despite a recent dividend cut and a 34% share price decline, BCE is shaping up to be a strong long-term opportunity — especially for investors focused on buying quality at a discount.
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Reliable Income Stream — Even After the Cut
Yes, BCE trimmed its dividend. But even after the reduction, the telecom giant still offers a strong yield of around 5.4%, or about $1.75 per share annually. That’s significantly higher than many other blue-chip stocks — and competitive with GICs.
More importantly, that payout is now better supported by the company’s free cash flow (FCF). In Q2 2025, BCE reported a 5% year-over-year increase in FCF to $1.15 billion. Management is projecting 6–11% FCF growth for the full year — a key sign that the dividend is not just sustainable, but on solid footing.
Also Read: Canadian stocks to buy 2025
Strategic Reset for Long-Term Growth
This isn’t just about protecting income — BCE is also making bold moves to reposition for future growth. One example is the $4.5 billion sale of its MLSE stake, which helped fund the acquisition of Ziply Fiber, expanding BCE’s fibre reach into high-demand U.S. markets.
Another major growth lever? AI infrastructure. BCE is developing up to 500 megawatts of hydro-powered AI data centres through its Bell AI Fabric initiative — tapping into one of the fastest-growing tech sectors.
Its media business is also performing well, with Crave subscriptions up 29% and digital ad revenue climbing 9% — a sign that BCE’s pivot to digital-first media is gaining momentum.
Undervalued and Defensive
Despite all this progress, the stock is trading near multi-year lows, with a price-to-earnings ratio of just 11.8. Concerns around earnings pressure, high leverage, and regulatory issues have pushed shares down. But with a beta of 0.68, BCE tends to fall in broader market sell-offs rather than due to company-specific problems — giving it defensive appeal.
The company still carries $37.6 billion in debt and a debt-to-equity ratio above 200%, so risk isn’t off the table. However, with interest rates beginning to ease — and the Bank of Canada cutting its rate to 2.5% — BCE’s debt becomes more manageable, especially with strong FCF to support refinancing.
The Bottom Line
BCE isn’t a speculative turnaround play — it’s a high-yield dividend stock with deep value and growth potential. The 5.4% dividend alone could generate $382 annually from a $7,000 investment today.
But beyond the income, BCE offers exciting exposure to AI infrastructure, broadband expansion, and digital media — all areas with significant growth runway.
For long-term investors looking to buy, hold, and collect income while riding future upside, BCE is a top pick to consider at today’s beaten-down price.
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