Is BCE Stock a Buy?

BCE stock (TSX:BCE) has seen shares drop as it feels pressure from all sides, so is the stock a buy for long-term holders?

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published November 22, 2023 9:45 am EST

It’s a great question. BCE (TSX: BCE) has been in a very interesting position lately as the stock continues to trade fairly low compared to its 52-week highs. So today, let’s look at what’s been going on with BCE stock, and whether it’s a great deal, or just a dud.

What happened

There have been a few things going on with BCE that investors should be aware of. First off, the company has seen its competition increase against rival telecommunications company Rogers (TSX: RCI.B) as it looks to take over Shaw Communications (TSX: SJR.B). Such a merger would put enormous pressure on Canada’s largest telecom business. And yet, it’s not all the company has to deal with.

BCE has also been under pressure owing to changes made by the Canadian Radio and Television Commission (CRTC). The CRTC has made a few changes lately that BCE stock frankly isn’t too fond of. And BCE’s response? It claims the regulator’s “priorities are backwards.”

Why so glum, chum?

BCE is already at odds with the CRTC over changes that recently affected its guidance. The CRTC stated these larger companies must provide access to smaller wireline and wireless producers to increase competition. This caused the company to lower its expectations for growth through 2025. Originally, it hoped to increase customers from seven million in 2023 to nine million by 2025, but that dropped down to 8.3 million.

More recently, the CRTC stated a news fund would be created to provide money to broadcasters, and require foreign streamers to contribute to the subsidy. BCE stock stated they should therefore exempt Canadian streamers, like Crave. This is now going to be looked at in a hearing next week, in order to push Canadian content.

“Your priorities are backwards,” Jonathan Daniels, Bell Canada vice-president of regulatory law stated. “Traditional broadcasters, the linchpin of the Canadian broadcasting system, need relief and we need it now.”

BCE stock is hurting

It’s more bad news for the company, which already had to lay off 1,300 employees during its recent earnings report. It also shut or sold nine radio stations, and closed two foreign bureaus as financial pressure increases. BCE is now filing an application to appeal all these CRTC decisions, arguing in the end it will hurt Canadian content, not promote it.

So what does this mean for investors? Honestly, BCE stock is going through hard times but they’re not going to kill the company. While it might prove a difficult time, eventually it will recover. It remains the largest of the Canadian telecom giants, even with a potential merger. Therefore, now could in fact be a deal for long-term investors.

Investors can now grab a 7.18% dividend yield, with shares down 15% in the last year. Yet be warned. There is likely to be more bumps on the way. So unless you’re in for the long haul, perhaps wait on the sidelines for now.