I think BCE (TSX:BCE) is a stronger, safer business today than it was two years ago. The painful dividend cut that angered income investors fixed a problem that was dragging the TSX dividend stock down.
The roughly 5% yield you can buy now sits on much firmer ground than the bloated payout it replaced. For patient income investors, that makes BCE worth a fresh look.
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Why BCE cut its dividend in 2025
For decades, BCE was a core holding in Canadian income portfolios. The telecom giant paid a generous dividend and raised it year after year. Then, in May 2025, management cut the annual dividend by 56%, from $3.99 per share to $1.75 per share.
The root cause was simple. Back in 2020, when interest rates were near zero, BCE poured money into a massive fibre network buildout. Soon after, interest rates increased, leaving BCE with huge spending commitments and a mountain of debt at much higher borrowing costs.
The competitive landscape made things worse.
- Quebecor’s Freedom Mobile sparked a wireless price war and slower immigration cooled new subscriber growth.
- And the CRTC forced big carriers to share their fibre networks with smaller rivals, squeezing margins on infrastructure BCE had paid dearly to build.
- Notably, BCE was paying out more than 100% of its free cash flow as dividends, making the elevated dividend yield unsustainable.
The 56% dividend cut brought the payout ratio to less than 50%. The telecom giant also scrapped the costly dividend reinvestment plan that was issuing new shares at a discount.
Moreover, it slowed the pace of its Canadian fibre build and signed a partnership with the Public Sector Pension Investment Board to fund Ziply Fiber’s U.S. expansion.
In Q1, BCE reported total revenue growth of 4% and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) growth of 2.9% year over year.
Bell Business Markets, which includes its artificial intelligence-powered solutions business, grew revenue 9.7% in the quarter.
Is TELUS stock a good buy right now?
At first glance, TELUS (TSX:T) looks more attractive. The stock yields close to 10%, and management has pointed to record free cash flow of $2.2 billion in 2025, up 11%, plus 19% free cash flow growth in the first quarter of 2026.
To protect its balance sheet, the Canadian tech stock paused its dividend growth program in December 2025 until it lowers debt levels and strengthens the financials.
At its Q1, management said net debt-to-EBITDA was 3.5 times at the end of March, down from 3.9 times a year earlier, with a goal of reaching 3 times by the end of 2027.
Down 52% from all-time highs, TELUS remains a debt-heavy company with a frozen dividend and an elevated yield.
Is BCE a better buy than TELUS stock?
By putting the balance sheet first and chasing real cash flow, BCE has turned itself into a lower risk business with financial flexibility. The current yield near 5% is backed by essential infrastructure and, for the first time in years, a payout the business can afford.
TELUS, by contrast, is still in the middle of its deleveraging story. The business has real strengths, including its fibre network, TELUS Health, and a growing AI strategy. But income investors are taking on more risk than the yield suggests.
I am not promising a quick rebound for BCE. The turnaround will take time, and wireless pricing remains a wild card, as both companies acknowledged on their Q1 calls.
But for patient investors who want steady income from a Canadian telecom leader, BCE finally looks like a payout you can trust again.
If you are choosing between these two TSX dividend stocks today, BCE is the stronger, safer bet.
