Not long ago, BCE (TSX: BCE) and its dividend were getting a lot of attention for all the wrong reasons.
In 2025, the company took a significant step, one that many investors were expecting, cutting its quarterly dividend by more than 50%.
For investors who saw it coming, the move was necessary. But for many others, a cut of that magnitude, especially from a blue-chip stock known for income, doesn’t just shake confidence; it completely changes how the market views the business.
However, while the dividend cut was painful, it also allowed BCE to reset financially and gave management much more flexibility going forward.
And now, instead of investors focusing only on whether the dividend is safe, more attention is starting to shift toward what BCE could become over the next few years.
So, while a dividend cut is never ideal, BCE still has long-term growth potential from the heavy investments it’s made in areas like AI infrastructure, fibre, and 5G.
And now that the reset is behind it, the company also has a much more sustainable payout, which is exactly why BCE’s dividend is getting so much attention right now.
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Why BCE’s dividend suddenly looks much safer
Before the cut, BCE’s dividend had become extremely difficult to support.
With all the significant capital expenditures BCE was making to grow the business and keep it competitive, it was paying out roughly 125% of its free cash flow.
So, cutting the dividend didn’t just reduce its payout; it freed up billions in capital.
And that’s significant because instead of stretching its balance sheet to maintain the dividend, the company can now support it with actual cash flow from the business.
Management has already made that clear by committing to hold the annual dividend at roughly $1.75 through at least 2027, while targeting a much more reasonable payout ratio in the 40% to 55% range of free cash flow.
Furthermore, even after the cut, with BCE shares continuing to trade in the low to mid-$30 range, the stock still offers a dividend yield of roughly 5.3%, which remains attractive for income investors.
Why it continues to be a reliable long-term investment
With the balance sheet in a better position, BCE can now focus not just on providing sustainable income, but also on the long-term growth opportunities it’s been investing in, which offer much more potential than traditional telecom services.
And that strategy has already started to yield strong results. For example, in its most recent quarter, BCE delivered earnings of roughly $0.63 per share, beating expectations of around $0.57. At the same time, its AI-related revenue surged more than 100% year over year.
That’s not something investors were focused on a year ago when its dividend was clearly unsustainable, and the yield had climbed above 10%.
Furthermore, in addition to the long-term growth potential it offers, there are also some signals that insiders see value at current prices.
For example, recently, incoming board chair Louis Vachon disclosed that he’s been buying shares on the open market. And while that doesn’t guarantee a turnaround, when senior insiders start buying after a major reset, investors tend to pay attention.
That’s why BCE continues to be one of the best long-term stocks investors can buy now.
The stock pays a safe and sustainable 5.3% yield, has improving cash flow, and has the size, expertise, and access to capital to reposition itself for long-term growth as one of the leaders in the sector.
And that compelling combination is why the stock is getting so much attention right now.
