It has been more than a year since BCE (TSX: BCE) cut its dividend by more than 50% in May 2025. While the decision disappointed many income investors, it also marked an important turning point for the telecom giant. With the share price now reflecting the lower payout, BCE is once again attracting attention because investors are evaluating whether today’s dividend is both attractive and sustainable.
At $30 and change per share at writing, BCE stock offers a dividend yield of nearly 5.8%, well above the approximately 2.1% yield of the broader Canadian market, as measured by the iShares S&P/TSX 60 Index ETF. For investors seeking dependable income, that higher yield alone makes BCE worth a closer look.
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A stronger dividend foundation
The dividend reduction was painful, but it also strengthened BCE’s financial position. Rather than relying heavily on additional borrowing to fund investments, the company redirected cash freed up from the dividend cut toward improving its balance sheet while maintaining an investment-grade BBB credit rating from S&P.
Today, BCE’s trailing 12-month dividend represents about 72% of free cash flow — a much healthier payout level than before the cut. Management has also emphasized reducing its net debt-to-earnings before interest, taxes, depreciation, and amortization leverage ratio over the coming years. Those moves improve the likelihood that the current dividend can be maintained and, eventually, resume growing as earnings strengthen.
Beyond income, the dividend stock also appears reasonably valued. Trading at a price-to-earnings (P/E) ratio of about 11.3, the stock sits below the broader market’s valuation. If management successfully delivers on its growth strategy while restoring investor confidence, shares could reasonably climb above $40 over the next several years, representing upside of more than 30% before factoring in dividend income.
A business reinventing itself
BCE is no longer relying solely on Canada’s mature wireless and broadband markets. The company is executing a strategic transformation toward technology infrastructure and enterprise services, with artificial intelligence (AI) playing a central role.
Management is targeting $2 billion in AI-powered solutions revenue by 2028, supported by major data centre investments. One of the company’s most ambitious projects is a 300-megawatt AI data centre in Saskatchewan, developed alongside technology partners including Cerebras Systems and CoreWeave. While AI revenue remains a relatively small portion of BCE’s business today, these investments could become meaningful long-term growth drivers.
U.S. expansion adds another growth engine
BCE’s acquisition of Ziply Fiber is also reshaping its future. The U.S. fibre business helps diversify revenue beyond Canada’s highly competitive telecom market while expanding BCE’s presence in faster-growing regions.
Although aggressive network expansion is weighing on free cash flow in the short term, Ziply has already contributed positively to service revenue growth. As more customers connect to the expanding fibre network, profitability and cash generation should improve.
Investor takeaway
BCE’s dividend continues to attract attention because it now combines a generous yield with a stabilized financial foundation. Investors also have the opportunity to participate in a potential multi-year turnaround driven by debt reduction, AI investments, and U.S. fibre expansion.
While execution risks remain, patient, income-focused investors may find it worthwhile to further investigate BCE today, as it offers a potentially appealing combination of income, value, and long-term recovery potential.
