BCE (TSX: BCE) is Canada’s leading communications and media service provider. Through its portfolio of services, ranging from wireless and internet connectivity to television, media content, and AI-driven enterprise solutions, BCE plays a significant role in the country’s communications infrastructure.
Notably, BCE was also a top income stock due to its ability to consistently raise its dividend, which made it a staple holding in many dividend-focused portfolios.
However, that reputation changed last year when BCE reduced its annualized dividend from $3.99 to $1.75 per share. The move surprised many shareholders and understandably unsettled income investors who had relied on the company’s steady payout growth. The cut signalled that the TSX stock is facing near-term pressures, which raised concerns about the stability of its future cash flows.
Several headwinds contributed to this decision. Higher costs, regulatory pressures, and aggressive price competition in both wireless and broadband markets weighed on BCE’s margins.
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Is BCE’s dividend sustainable?
Although the dividend reduction initially dragged BCE stock down, it was a strategic reset, and the company’s fundamentals remain solid. By lowering its payout, BCE is retaining more cash to pay down debt. It is strengthening its balance sheet and targets to cut its leverage ratio of 3.5 times adjusted EBITDA by 2027, with an eventual goal of 3 times.
BCE is now targeting a payout ratio of 40% to 55% of free cash flow, a range that appears sustainable over the long term. Importantly for income investors, BCE stock still offers an appealing yield. Based on its March 11 closing price of $35.19, BCE’s dividend yield remains around 5%, which is attractive.
Is BCE Stock a buy for its 5% yield?
BCE is set to benefit from its multiple revenue streams across wireless, fibre broadband, AI enterprise solutions, and media. In wireless, the company is seeing an improvement in average revenue per user (ARPU), supported by strong net postpaid mobile customer additions on its Bell brand. Rather than pursuing rapid subscriber growth, management is prioritizing higher-quality customers with better lifetime value, a strategy that should help strengthen margins over time.
Fibre broadband remains a major growth engine. In 2025, fibre services drove significant net new subscriber additions, including operations in the U.S., contributing to 8% growth in internet revenue. The acquisition of Ziply Fiber has also expanded BCE’s presence in the U.S., providing a platform for long-term growth. Network expansion is expected to accelerate from the second half of 2026 as investment shifts toward higher-growth markets.
Beyond connectivity, BCE is building new revenue streams in AI-powered enterprise services. Products such as Ateko, BellCyber, and Bell AI Fabric generated about $700 million in revenue in 2025, up roughly 60% year-over-year. BCE is targeting $1.5 billion in revenue from its AI solutions by 2028.
At the same time, BCE’s media segment is showing solid momentum, particularly in digital and streaming services. The company’s streaming platform, Crave, ended the year with 4.6 million subscribers, reflecting continued demand for its digital entertainment offerings. Growth in streaming has been a major contributor to the company’s increasing digital revenue share, with digital channels now accounting for 44% of total media sales.
Overall, BCE’s diversified business model, emphasis on improving margins, and focus on customer retention position the company well for long-term growth. Management’s focus on strengthening the balance sheet while expanding higher-margin services is expected to support continued growth in free cash flow. Stronger cash generation, in turn, should help sustain the company’s dividend, making BCE a reliable income stock.
