A dividend inventory seems low-cost when the market punishes it more durable than its long-term money energy deserves. You normally see the next yield, a decrease earnings a number of, and loads of grumbling within the headlines. The entice is that “low-cost” can actually imply “burdened,” so it’s worthwhile to test whether or not the dividend nonetheless suits the enterprise, not simply whether or not the value seems like a discount. So, the place does BCE (TSX:BCE) slot in?
BCE
BCE is one in all Canada’s telecom heavyweights, with Bell’s wi-fi, fibre web, and media property sitting underneath the umbrella. It sells the sorts of providers folks hold paying for even when budgets tighten, which is why revenue traders hold coming again to it. Nonetheless, the final yr reminded everybody that telecom doesn’t equal risk-free, particularly when competitors heats up and debt prices keep sticky.
The tough stuff has been very actual. BCE reduce its dividend in 2025, slashing the annual payout to $1.75 per share from $3.99, and the said cause got here again to stability sheet pressure and a payout that had gotten out of line with fundamentals. That type of reset can really feel brutal within the second, but it surely additionally stops the bleeding and provides administration room to rebuild credibility.
BCE additionally went by means of a messy reset yr that included reshaping the asset base and taking actions to strengthen money circulation. One headline transfer was promoting its minority stake in Maple Leaf Sports activities and Leisure to Rogers for $4.7 billion, or $4.2 billion web of taxes. This helped it sharpen capital allocation and deal with the core telecom engine. It additionally leaned right into a U.S. development angle with the Ziply Fiber acquisition, which provides each alternative and execution danger.
Earnings help
Numbers-wise, these have been sensible strikes. In This fall 2025, BCE reported web earnings of $632 million and adjusted web earnings of $643 million, whereas adjusted earnings per share (EPS) got here in at $0.69, down 12.7% yr over yr. Income held primarily flat within the quarter at $6.4 billion, and adjusted earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) rose 2.3% to $2.7 billion. It additionally boasted an adjusted EBITDA margin of 41.6%, which it referred to as its highest This fall margin in additional than 30 years.
The complete-year image seemed sturdier on money circulation than the quarter did. BCE stated 2025 free money circulation (FCF) rose 10% to $3.2 billion. The dividend story now lives and dies on FCF, not on nostalgia for the previous payout. BCE’s 2026 outlook additionally flagged a possible drop in adjusted EPS, even because it goals for greater adjusted EBITDA and better free money circulation. This tells traders the plan leans on price self-discipline and money conversion, not a sudden surge in income.
For 2026, BCE is mainly asking the market to evaluate it on execution. It guided to 1% to five% income development and 0% to 4% adjusted EBITDA development. It additionally set a cost-savings objective of $1.5 billion by 2028, which could possibly be an actual catalyst if it truly exhibits up within the quarterly run fee. The dividend inventory now has a ahead annual dividend of $1.28 and a ahead yield round 5%. That yield will be tempting, however it’s worthwhile to bear in mind what you’re shopping for: a capital-intensive enterprise that should hold investing in fibre and wi-fi whereas managing regulatory strain and aggressive pricing. Even so, here’s what $7,000 might usher in, for instance.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| BCE | $35.16 | 199 | $1.75 | $348.25 | Quarterly | $6,996.84 |
Backside line
So might BCE be a purchase for others in February? It might, if you would like a battered blue chip with a reset dividend, bettering money circulation focus, and a transparent plan to rebuild confidence. It is also a go if you would like clean crusing, as a result of BCE nonetheless has to show it may possibly develop money circulation whereas funding heavy community spending and competing in a decent Canadian telecom market. In case you purchase it, purchase it for the turnaround in money self-discipline, not for the reminiscence of the previous yield.