A strong recovery isn’t on the horizon for the TSX’s communication services sector, although major players have become value plays in 2026. Aggressive price wars, high debt levels, and regulatory uncertainty have led to sharp declines in share prices and a protracted sector slump.
Industry titan BCE (TSX:BCE) suffered its worst downturn in recent years. On July 6, 2026, the large-cap 5G stock registered a 52-week low of $29.66. The steep drop is nearly 50% from the intraday high of $56.18 on January 19, 2024. In May 2025, the inevitable happened. The giant telco slashed its quarterly payout by 56%.
If you invest today, BCE trades at $30.28 per share, down 5.1% year-to-date. The dividend yield, however, is 5.8%. While the dividend cut is hefty, the payout is more sustainable than before. Still, is this TSX dividend stock worth considering?
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Better than never
Investors were frightened by BCE’s decision to substantially slash dividends. The $28.2 billion telco, however, saw it as unsound to keep the payout ratio above 100% any longer. Many analysts expected the cut to happen. It was the only option to lessen the pressure on the balance sheet. The reset will likewise improve BCE’s free cash flow (FCF) profile and enable it to pay down debt.
For the full year 2025, operating revenues increased 2% year-over-year to $24.5 billion, while adjusted net earnings declined 6.2% to $2.6 billion versus 2024. While FCF rose 10% to $3.2 billion for the year, it fell 74.3% year-over-year to $225 million in Q4 2025. Total debt increased approximately 1.6% to $29.4 billion from a year ago.
Its CEO, Mirko Bibic, disclosed that the board listened to investors’ perspectives and deliberated for months. In the end, it was agreed that resetting the dividend was the most responsible way to address BCE’s capital allocation strategy. “Essentially, the new dividend level allows us to de-lever and invest for growth,” he said.
Making progress
In October 2025, BCE unveiled a three-year strategic plan designed to deliver sustainable growth across all key business units. Bibic said the plan focuses on core areas that will deliver sustainable growth for our investors. It includes AI-powered solutions and building a digital media and content powerhouse. Notably, the FCF guidance is a compound annual growth rate (CAGR) of approximately 15% between 2025 and 2028 after payment of lease liabilities.
BCE is making progress thus far, as evidenced by the Q1 2026 results. In the three months ending March 31, 2026, operating revenues increased 4% to $6.2 billion compared to Q1 2025, though net earnings declined 2.3% year-over-year to $667 million.
Notably, FCF rose 0.8% to $804 million from a year ago. The net debt leverage ratio at the quarter’s end was 3.8 times. However, BCE expects lower FCF in 2026 due to higher capital expenditures related to the construction of the Saskatchewan AI data centre.
Selling point
BCE made a painful but decisive decision to cut dividends. Still, the reduced yield remains higher than broad market averages. The more secure payout is the key selling point for this top TSX dividend stock, especially to income-focused investors.
