1 Perfect Dividend Stock Down 34% to Buy and Hold Forever

With a payout reset, bold asset moves, and a quiet push into AI and fibre, is BCE the under-the-radar dividend-and-growth play hiding in plain sight at multi-year lows?

Amy Legate-Wolfe

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. Before joining Motley Fool Canada, she 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. 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 September 21, 2025 10:00 am EDT

| More on: BCE

Key Points

BCE still yields around 5%+, and its dividend is now better supported by rising free cash flow and lower spending.
The company is refocusing for growth, selling MLSE to fund Ziply Fiber, investing in AI data centers, and growing digital media.
Shares are near multi-year lows, with falling rates easing debt pressure, giving defensive appeal and upside if free cash flow stays strong.

When it comes to perfection, it can be hard to decipher which dividend stock could actually meet that mark. Yet it might not be what you think. In fact, when it comes to real perfection from buying a dividend stock, you’ll want to find one thing: value.

Finding undervalued dividend stocks is what can truly mean finding a company to invest in that offers short-term income and long-term growth. And when it comes to that type of perfection, BCE (TSX:BCE) fits the bill.

Dependable income

The main reason that BCE stock offers strong long-term growth is its dividend profile. While the dividend stock did indeed slice its dividend, it pays about $1.75 per share annually, yielding around 5.4% as of writing. Therefore, even with the cut, it still pays more than most blue-chip Canadian dividend stocks. In fact, it comfortably gives guaranteed investment certificates (GICs) a run for their money.

What’s more, the dividend payout is now being supported by free cash flow (FCF). In fact, during the second quarter of 2025, FCF grew 5% year over year to $1.15 billion. Even better, management reaffirmed that it would grow 6% to 11% FCF for the full year. And with capital expenditure (capex) trending down and asset sales recycling capital, the dividend is covered better than ever before.

Reset towards growth

The reset doesn’t just mean a dividend cut. BCE has now repositioned itself for cash on hand and future growth. For instance, it sold its MLSE stake for $4.5 billion, which funded the Ziply Fiber purchase. This exited a non-core asset and moved towards high-return projects.

And the returns indeed look high. Ziply Fiber expands the fibre footprint into a growth market with rising demand for broadband. While there are risks, it could add huge long-term scale. Then there’s Bell artificial intelligence (AI) Fabric, which plans up to 500 megawatts of hydro-powered artificial intelligence data centres. These tap into one of the fastest-growing infrastructure themes. Add on its digital-first media arm, with Crave up 29% through subscriptions and digital ad revenue up 9%, and BCE is looking like a solid growth play.

Still valuable

Now for the best part. This dividend stock looks more valuable than ever before. Shares are down about 34% in the last year, with pressure on earnings, high leverage, and regulatory headwinds. Now, the dividend stock trades near multi-year lows, at 11.8 times earnings.

Yet with a beta of 0.68, BCE falls into the broader market sell-off rather than a warranted drop. Therefore, it can give investors some defensive appeal. And now, with the Bank of Canada cutting rates to 2.5%, BCE’s debt burden looks even more manageable. However, investors will need to watch the $37.6 billion debt carefully, with a debt-to-equity ratio over 200%. Yet if FCF stays strong, refinancing could be positive.

Bottom line

BCE stock is not a turnaround story that’s looking like a near-perfect buy. It offers a dividend yield of over 5%, improving FCF, and a defensive market position. That dividend could bring in $382 from a $7,000 investment as of writing!

COMPANY	RECENT PRICE	NUMBER OF SHARES	DIVIDEND	TOTAL PAYOUT	FREQUENCY	TOTAL INVESTMENT
BCE	$32.12	218	$1.75	$382	Quarterly	$7,001

But beyond dividends, there’s huge growth in the future from AI infrastructure and fibre. For investors who want a buy-and-hold dividend stock, BCE fits the bill, especially at this valuable price.