BCE’s Dividend Has Been Getting a Lot of Attention – Here’s Why

BCE Inc’s (TSX:BCE) dividend has been getting a lot of attention lately – mostly for the wrong reasons, but for some good ones too.

The discussion about BCE’s dividend started years ago, when the stock yielded nearly 12%. In 2024, BCE had a dividend well in excess of its per-share earnings, and dividend investors were eagerly lapping up shares. Life was good for BCE dividend investors, and they were more than happy to tell you about it.

Flash forward to May of 2025. That month, the company put out an earnings release that revealed pretty strong growth in earnings and cash flows, but nevertheless also announced a dividend cut from $3.99 to $1.75. The cut was predictably met with disgust from investors, who sent BCE stock tanking despite its good earnings results.

Flash forward to today. BCE’s dividend is once again being discussed, because with the market having risen so much, its 5% dividend payout now looks comparatively attractive. Canadian banks and utilities, once known for 5%-plus yields, now yield only 2 or 3 percent! BCE appears to stand out here relatively speaking. But is it a buy?

Let’s find out.

BCE’s business results

Long-term dividends are a function of how a business performs. BCE, being a Canadian telco, has not been performing exceptionally well in recent years. Over the last 10 years, its revenue has compounded at 1.4% per year, its earnings at 7.8%, and its free cash flow at 2.4%. These are not exactly terrible growth rates, but they’re not the kinds of growth rates that cause a company to rocket to 30 times earnings. If BCE’s future looks like its past, then its future returns will be a slow trudge upward.

Will its future be better than its past?

Here’s where things get interesting. Canadian telcos technically have a great formula for high profits. Foreign competition is nearly banned, and domestic upstarts face enormous regulatory hurdles. This should give Canadian telcos some pricing power; and indeed, Canadians pay more for cell and internet than just about anybody else in the developed world. However, the telcos have been having trouble actually raising the prices they charge, leading to stagnant growth. This is largely due to the CRTC intervening to prevent anti-competitive abuses such as high switching fees. So, despite their lack of meaningful competitors, Canadian telcos face impediments to growth stemming from bureaucratic red tape.

Is BCE worth it for the dividend?

Despite all of the issues mentioned above, BCE does have enough strengths to probably at least stabilize its earnings and cash flows where they are today. In the meantime, the stock has a 63% payout ratio, which is in the sustainable range. Given this, I would say that those who buy BCE for the dividend will continue to collect the dividend long term. The company has the earnings power to keep the dividend coming. But I would not expect this stock to deliver superior total returns. Its growth potential appears to be fairly limited, at least in the near term.