It’s that time of year when you bid adieu to 2025 and plan your 2026 investments. In your dividend portfolio, the common question is whether to accumulate more shares of BCE (TSX:BCE). BCE was a stock that slashed dividends by 56% and made an expensive acquisition at a time when its market share was shrinking, revenue was declining, and debt was sky high. Should these challenges be taken as a sign of weakness or the start of the next growth chapter following a company-wide restructuring?
Source: Getty Images
Better dividend stock for 2026: BCE or Telus?
Between BCE and Telus Corporation (TSX:T), Telus has stable revenue and dividend growth and is focusing on reducing debt. But is it enough to sustain dividends? The better-dividend stock depends on your investment objective.
Telus stock
If you are looking for immediate passive income, because you are retiring or have a new expense coming up, Telus is a better dividend stock for 2026.
Note that each year is different for different companies. That is how business cycles work. 2026 is the year for Telus because the management has increased the January 2026 dividend by 4%. The company has reduced its capital spending and sold its 49.9% equity interest in wireless tower operator Terrion for $1.3 billion and used some of the proceeds to reduce leverage.
In the third quarter of 2025, Telus reduced its net debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) to 3.5 times from 3.8 times from the year-ago quarter. It has also increased its free cash flow, maintaining a comfortable dividend payout of 75%. The ratios favour Telus as it has the financial flexibility to sustain its current dividends and grow them in the 3–8% range as guided by the company’s management.
BCE stock
Is there a compelling investment case for BCE? Should existing shareholders continue holding this stock?
The company’s restructuring efforts from telco to techno are gradually shaping up. BCE has acquired Ziply Fibre and is seeing a surge in revenue from digital video advertising and artificial intelligence (AI) powered enterprise solutions like Aetko and Bell Cyber. However, the declines in conventional business of wireline and radio continue to keep earnings and free cash flow stretched.
BCE has halved its dividend to focus on debt repayment and restructuring. This will take more time as a challenging macro environment, high debt, and price competition have delayed the restructuring outcome. BCE is having difficulty finding the right buyer for parts of its businesses.
While BCE’s struggles have weakened its current financial situation, it has the potential to grow with tech. The company will focus on deleveraging, which could see no dividend growth for a year or two.
However, BCE’s efforts to build AI Fabric and expand into other high-growth businesses could help it boost dividend growth in the long term. Those who own BCE stock and have a long investment horizon can keep holding it for the 5-6% dividend yield and future share price appreciation when the techno business picks up momentum.
Which is better for 2026 returns?
For investing in 2026, Telus is a better buy as you can lock in a 9.3% dividend yield, use the dividend reinvestment plan (DRIP) option, and enjoy a 4% dividend growth. However, BCE is a growth and dividend stock for long-term growth and AI opportunities. The dividend yield will be around 5.3% with no dividend growth for a few years. However, the DRIP option continues.
