BCE (TSX:BCE) inventory traders watched their dividend cost drop by greater than half in 2025. The Canadian telecom big slashed its annualized frequent dividend to $1.75 per share from $3.99, one of many sharpest cuts amongst main dividend shares in latest reminiscence.
The transfer rattled earnings traders who had counted on BCE’s regular payouts for years. However the firm insists the reset positions it for sustainable development.
BCE’s dividend technique faces mounting stress
The dividend minimize in 2025 was attributable to a number of headwinds, together with rising rates of interest that elevated borrowing prices. Furthermore, BCE continues to take a position closely in fibre and wi-fi community upgrades, whereas dealing with competitors within the legacy telecom section.
In 2025, BCE generated $3.2 billion in free money movement, a rise of 10% yr over yr. Previous to the dividend minimize, its annual dividend expense was roughly $4 billion.
In October 2025, BCE unveiled a three-year strategic plan designed to ship sustainable development whereas sustaining its “sustainable dividend technique.” At latest share costs across the mid-$30s, BCE inventory yields 5%.
The important thing to understanding whether or not BCE’s dividend is “maintainable” lies in its free money movement projections. Throughout its Investor Day presentation, BCE outlined an bold goal of roughly 15% compound annual development price (CAGR) in free money movement after cost of lease liabilities between 2025 and 2028.
That particular metric issues as a result of lease funds signify an actual money obligation that reduces what’s obtainable for dividends and different makes use of. In 2024, BCE generated $1.7 billion in free money movement after lease funds.
Mixed with anticipated enhancements from $1.5 billion in deliberate price financial savings and declining capital depth to roughly 14% by 2028, the corporate argues it could comfortably fund the dividend.
BCE’s present dividend payout ratio goal is an inexpensive 40%–55% of free money movement.
What development drivers help the BCE inventory dividend?
BCE’s capacity to fund even its lowered dividend is dependent upon executing its development technique throughout 4 priorities.
- First, the corporate is banking on improved buyer retention. Postpaid wi-fi churn improved for the third consecutive quarter in This autumn, dropping 17 foundation factors year-over-year to 1.5%.
- Second, BCE continues to develop its fibre footprint. It added roughly 200,000 web new fibre subscribers in 2025, together with U.S. operations by its Ziply Fiber acquisition. Fibre generates increased margins than legacy copper companies.
- Third, BCE is constructing what it calls AI-powered enterprise options. The corporate launched three new companies, Ateko, Bell Cyber, and Bell AI Material, which collectively grew by roughly 60% yr over yr to roughly $700 million in income.
- Fourth, digital media continues shifting towards higher-margin streaming. Crave added multiple million subscribers in 2025, ending the yr with 4.6 million subscribers.
BCE additionally outlined plans to cut back its web debt leverage ratio to three.5 occasions by the top of 2027, down from roughly 3.8 occasions at present. Decrease debt reduces curiosity expense, liberating up extra cash for dividends.
Can traders belief the brand new dividend degree?
BCE expects to distribute roughly $5 billion in dividends to frequent shareholders over the subsequent three years. That quantities to roughly $1.7 billion yearly, which aligns with the present $1.75 per share price given BCE’s excellent share depend.
For earnings traders, BCE now presents a extra modest however probably extra sustainable yield. The 5% dividend may not excite yield-chasers, however it beats watching one other minimize if free money movement disappoints.