BCE (TSX:BCE) has been one of the worst-performing large-cap Canadian stocks over the last five years. In that period, the stock has declined 37% in price, while delivering a 14% total return.
These results look particularly bad when compared to the TSX in the same period: the index has delivered a 92% return in five years. It’s pretty clear that BCE stock has disappointed investors. What’s really interesting, though, is the role that the company’s dividend played in investors’ disenchantment with BCE. In this article, I’ll explore what’s going on with BCE’s dividend and what it means for shareholders.
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What’s going on with BCE’s dividend?
In its May 2025 earnings release, BCE announced that it was about to cut its dividend from $0.99 to $0.43 per quarter — more than half!
The dividend cut was dramatic, and it triggered a major selloff in BCE stock, which fell 43% in the period after the dividend cut was announced.
On the surface, this would appear to be unusual behaviour. Academic theory in finance says that a dividend should reduce the value of a stock, not increase it. Going by this theory, a dividend cut should be followed by stock price gains. There are two main reasons why that didn’t happen with BCE.
- The company’s dividend cut coincided with a very high payout ratio. At the time, when BCE announced the cut, the company was paying out more in dividends than it made in profit. Obviously, that had to end at some point.
- Stocks don’t always behave the way academic theory says they should. Some investors have a dividend preference; for these investors, a stock becomes less appealing with no or a lower dividend, not more. Whether these investors’ preferences are correct or not is immaterial; they are in the markets and influencing stock prices.
So, BCE’s $0.43 dividend is likely to remain at that level now. Apart from placating some dividend-worshipping shareholders, the company has no fundamental reason to hike its dividend.
How much passive income can you make with BCE Inc stock now?
As mentioned previously, BCE now has a $0.43 quarterly dividend. That works out to $1.72 per year. The stock price is currently $35.35. Therefore, BCE has a 4.86% dividend yield. That’s enough to make $4,860 per year in dividends with $100,000 invested. Here’s some math to confirm that:
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| BCE Inc | $35.35 | 2,829 | $0.43 per quarter ($1.72 per year) | $1,216.47 per quarter ($4,865.88 per year) | Quarterly |
As you can see, the dividend potential with BCE Inc is still substantial, even after the dividend cut. All this assumes that no more cuts are forthcoming, but with earnings being pretty stable and BCE having only two real competitors nationwide, it looks like the payout is safe for now.
Foolish takeaway
What’s going on with BCE’s dividend is that it is now stable after previously having been cut. The stock was very volatile in May of 2025, when the cut was just being announced. Things are quieter now. With BCE’s payout ratio now comfortably below 100%, they are likely to stay that way.
