One of the hardest parts of long-term investing is often simply doing the obvious thing. Buying high-quality businesses and holding them for years sounds simple. However, when Canadian dividend stocks sell off and sentiment turns negative, that’s usually when investors hesitate the most.
The problem with hesitating as high-quality stocks fall is that those are often the best long-term opportunities.
Because the key isn’t whether a stock is down. It’s whether the underlying business is still strong enough to keep performing and compounding over time.
And that’s why, with BCE (TSX: BCE) continuing to trade undervalued in the current economic environment, it’s one of the best Canadian dividend stocks to buy now.
Over the last year, the company has gone through a significant reset, and the stock has been under pressure as a result. But now that much of that process is behind it, the focus should shift back to what actually matters long term.
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Why BCE still has a reliable long-term business model
Although the telecom sector has been under pressure in recent years due to heavy capital spending to upgrade networks, BCE is still an essential infrastructure business.
It’s no secret that Canadians rely on wireless, internet, and data services every single day, regardless of what’s happening in the economy. And the reliance Canadians have on communication services creates a highly recurring revenue model, which is one of the most important traits for any long-term investment.
This isn’t a business built on trends or short-term demand cycles. It’s built on services that people and businesses continue to need year after year.
And over the last several years, BCE has invested heavily to strengthen that position.
Its fibre and 5G networks required significant capital, but those investments have already been made. That means the company now owns a modern communications network that it can continue to monetize for years.
That’s what makes this setup so important because once that infrastructure is built, it becomes a long-term asset that supports consistent cash flow for decades.
So, while the recent period has been challenging, if anything, the demand for connectivity, data, and digital infrastructure continues to grow, which only reinforces the long-term value of what BCE provides.
That’s why, despite all the noise around the stock, the core business still looks built to last, and BCE looks like one of the best Canadian dividend stocks to buy now.
Why the Canadian dividend stock may now be in a stronger position going forward
In addition to the fact that BCE’s updated infrastructure can generate revenue for years and much of the heavy capital spending is now behind it, the company also looks much more reliable and sustainable after resetting its dividend just over a year ago.
With that reset behind it, the payout is far more sustainable, at roughly just 50% of its free cash flow, giving the company expanded room to focus on strengthening its balance sheet and improving long-term cash generation.
And even with that reset, the stock still offers a yield of roughly 5.1%, which now comes with a much healthier margin of safety.
That shift matters more than most investors realize because instead of constantly managing a tight financial position, BCE can now operate with a structure that better supports the business going forward. And with much of the major investment cycle already completed, future cash flow can be used more efficiently.
At the same time, the company continues expanding into areas tied to enterprise services, data infrastructure, and newer digital solutions. These aren’t short-term catalysts, but they do strengthen the long-term growth outlook and show the business is evolving alongside demand, not falling behind it.
And on top of that, the valuation still looks attractive. For example, BCE is currently trading at an enterprise value to earnings before interest, taxes, depreciation and amortization (EV/EBITDA) ratio of roughly 7 times, compared to its 10-year average of 8.1 times. That’s a roughly 14% discount to its historical valuation.
So, while the narrative has been focused on what went wrong, the reality is that BCE may now be in a healthier position than it was before, which is why it’s one of the best Canadian dividend stocks to buy now and hold for the long haul.
