Has BCE Stock Finally Hit Rock Bottom?

BCE (TSX:BCE) stock is a dividend powerhouse, but a cut could loom as 2025 guidance approaches.

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Shares of ailing telecom firm BCE (TSX:BCE) have continued to plunge to new depths through 2024, disappointing many dip-buyers who may have tried to time a bottom in the name. Undoubtedly, catching a falling knife isn’t so simple. And if you don’t have extra capital to “average down” your cost basis, you may be looking at fairly steep losses that only tend to grow month to month.

Indeed, BCE stock is going for $33 and change, a far cry away from the $73 or so it traded all the way back in 2022. Undoubtedly, crashes exceeding 50% don’t come all too often, especially for dividend darlings that many Canadians leaned on as one of the bluer blue chips in their portfolios. With a close to 55% discount and a nearly 12% dividend yield on the name, investors may wonder if it’s time to throw the towel at a loss.

After all, there aren’t all too many double-digit yields that are safe from a reduction. And while a number of analysts have been quite vocal about BCE slashing its payout, I’m not so sure what the reaction will be if such a historic dividend cut were to happen. After all, one has to think that a high chance of such a reduction is already priced in at this point. In any case, BCE will be serving up guidance for the year in around a month’s time. Whether it’s enough to clear the air and get investors back in the name, though, remains the big question.

BCE stock’s headwinds won’t be so quick to fade

Headwinds that have been weighing down the stock could persist for even longer, but with so little in the way of optimism baked into BCE, perhaps continued weakness may not move the needle as much as expected. Indeed, stocks tend to move based on how the numbers stack up against expectations. And whenever expectations (and the stock) are close to the floor, a stock can begin the bottoming out process without so much as a catalyst.

Though I wouldn’t get my hopes up for rosier guidance for the year when it comes due, I think that deep-value seekers who wouldn’t mind a dividend reduction can still do well in the name. Of course, just brace yourself for a potential 25-50% dividend reduction (or maybe even more) as the stock continues tumbling further into the abyss.

Indeed, it seems like BCE can’t hit bottom. But when it does, the ensuing rally could be as fast as it is ferocious. Some analysts think a dividend cut is a must if BCE is going to turn a corner. I’m in agreement.

Is this rock-bottom, or is more pain ahead?

The dividend commitment is quite substantial. And unless the industry tides turn (don’t hold your breath for it), BCE’s turnaround trajectory could be drawn out. So, is BCE stock finally bottoming out, or is there a visit to the high-$20s in the cards in 2025? It’s tough to tell. I think shares are closer to the bottom than the top. Either way, cautious bottom-fishing could prove wise for those keen on getting in the name as BCE looks to take steps to turn its business around.

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