BCE (TSX: BCE) investors have been on a rough ride for much of the past four years. Contrarian investors seeking passive income and a shot at some decent potential upside, however, are wondering if BCE is now undervalued and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP).
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BCE share price
BCE trades near $35 per share at the time of writing. The stock is down from more than $70 in early 2022, but is up from the $12-month low around $29.
Soaring interest rates in 2022 and 2023 caused the initial downturn in the share price. The Bank of Canada aggressively raised interest rates in an effort to get inflation under control. BCE carries a lot of debt on its balance sheet, so the sharp spike in borrowing costs caused concerns among investors that the impact on profits and the reduction of cash flow would force BCE to trim its generous dividend.
BCE initially maintained the payout, waiting for rates to decline. The central bank started reducing interest rates in 2024 and 2025, but borrowing costs remained elevated.
On the operational side, declining advertising revenue at Bell Media put extra pressure on the business. This occurred as communications providers also battled through a price war for mobile and internet customers in 2024.
In order to free up some capital, BCE agreed in 2024 to sell its 37.5% stake in Maple Leaf Sports and Entertainment (MLSE) to Rogers Communications (TSX: RCI.B) for $4.7 billion. Analysts initially viewed the deal as a positive move for BCE, with the expectation that the company would use the funds to reduce debt. That didn’t happen.
In late 2024, BCE announced it had agreed to spend $5 billion to acquire an American internet service provider, Ziply Fiber. Investors then found out in May last year that BCE was cutting the dividend. The stock was already under severe pressure leading up to the announcement, which many analysts had predicted. The MLSE deal with Rogers closed in July 2025, and BCE closed the Ziply Fiber purchase in August.
Opportunity
Ziply Fiber gives BCE a growth platform in the United States where there is more potential for expansion than in Canada. The price wars on Canadian mobile and internet plans eased in 2025 as providers started to focus on rebuilding margins. Bell Media continues to trim staff as it streamlines the business, but there are also some green shoots in the group. BCE’s Crave streaming service is doing very well. The service saw subscriptions rise 26% in Q4 compared to the same period in 2024, receiving a boost from the global popularity of its Heated Rivalry series.
BCE is also moving into the AI data centre and corporate AI services sector. Canadian businesses want to keep their data stored in Canada. As AI expands, this could become a new growth engine for BCE.
The bottom line
Investors will need to be patient, but most of the risks should already be priced into the stock, and there is some decent potential upside over the coming years. In the meantime, you get paid a solid 5% dividend yield right now to wait for the recovery.
