When it comes to buying massive, well-established and reliable blue-chip stocks, there’s no question that BCE (TSX: BCE) is among the best of the best.
It’s well-known as a core part of the country’s telecom infrastructure, and a stock that dividend investors have owned and relied on for decades.
Unlike its competitors who have often displayed more growth potential over the years, BCE has always been known as one of the most reliable dividend stocks, not just in the telecom space but across the TSX.
That’s why the stock’s recent struggles over the past few years have raised so many questions. The share price has been under pressure, and the dividend was trimmed in May 2025, so, naturally, that’s led many investors to wonder whether the worst is finally behind the stock.
So, let’s look at how BCE’s business is positioned today, and whether the stock has finally hit rock bottom, making this the perfect entry point for long-term investors.
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The telecom industry and BCE’s position today
The Canadian telecom industry has gone through a difficult stretch recently. Years of heavy investment from BCE and its competitors in fibre and 5G infrastructure, followed by higher interest rates, have put pressure on balance sheets across the sector.
BCE has felt that pressure more than most. The company carries a significant amount of debt, and while that debt helped fund acquisitions and network investments that strengthened its scale and dominance, it also reduced financial flexibility when interest rates moved higher.
Furthermore, over the years, BCE has made several acquisitions and investments to expand its offerings, grow its market share, and reinforce its position as a national telecom leader. Those moves helped build scale and have positioned BCE well for the long haul, but they also came at a cost in the near term.
Therefore, management ultimately had to make the difficult decision to trim the dividend in mid-2025. And although that was painful for income investors at the time, the move was intended to reset expectations and protect the long-term potential of the business by putting BCE on a more stable footing going forward.
Why BCE looks more stable from here
Today, BCE looks far more stable than it did a couple of years ago, even though the share price hasn’t reflected that yet.
The most important change is that the dividend now looks much more sustainable, which was the key issue hanging over the stock before the cut. With the payout reset and capital spending expected to start declining rapidly, BCE has more flexibility to generate free cash flow and use it in a more disciplined way.
In the near term, a large portion of that free cash flow will likely go toward paying down debt, which is exactly what investors want to see at this stage. Reducing leverage should lower financial risk and gradually improve the company’s overall profile.
Over time, as leverage comes down and the company continues to find efficiencies, BCE can start to resume annual dividend increases again.
Therefore, while BCE trades at just over $30 a share, it’s valued at a forward enterprise value to earnings before interest, taxes, depreciation and amortization (EV/EBITDA) ratio of just 7 times. That’s well below its 5 and 10-year averages of 8.1 and 8.2 times, respectively.
At the same time, the stock offers a dividend yield of roughly 5.2%. So, between the ultra-cheap share price, the more sustainable dividend, and its improving cash flow outlook, it certainly looks like BCE may have finally hit rock bottom and could start to recover from here.
