A Canadian Dividend Stock Down 59% to Buy and Hold for Retirement

BCE’s “boring” dividend reputation cracked, but a reset payout and a turnaround plan could still interest retirees.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published August 4, 4:10 pm EDT

Retirement investors usually want boring. A reliable dividend arrives, the bills get paid, and nobody needs to inspect a stock chart before breakfast. Yet one familiar Canadian income stock has fallen 59% from its 2022 peak after discovering that “boring” and “invincible” aren’t quite synonyms.

senior relaxes in hammock with e-book — Source: Getty Images

Considerations

A decline this large doesn’t automatically create a bargain. Retirees need income that can survive recessions, inflation, and expensive surprises, not merely the highest yield displayed on a brokerage screen. Free cash flow, debt, and payout coverage deserve considerably more attention than an exciting percentage.

Dividend cuts also require some nuance. They’re painful for existing shareholders, yet reducing an unaffordable payment can preserve cash, repair the balance sheet, and create a safer starting point for new investors. The old dividend has already left the building. Today’s buyer must judge the smaller one.

Account choice can make that income more useful. Registered Retirement Savings Plan (RRSP) and Registered Retirement Income Fund (RRIF) withdrawals become taxable income and may eventually affect the Old Age Security (OAS) recovery tax. Withdrawals from investments held inside a Tax-Free Savings Account (TFSA) generally won’t, providing retirees with a flexible source of tax-free cash.

BCE

So let’s look at BCE (TSX: BCE), which owns Bell, providing wireless, internet, television, streaming, business communications, cybersecurity, and digital services. Canadians might cancel several luxuries during a downturn, but asking the household to surrender Wi-Fi could cause an immediate family uprising.

The trouble came from slow growth, intense competition, rising interest costs, heavy network spending, and too much debt. BCE stock eventually reduced its annual dividend by 56% in 2025, from $3.99 to $1.75 per share. The shares recently closed at about $30, approximately 59% below their April 2022 peak of $74.09.

That reset leaves today’s stock yielding approximately 5.8%. BCE stock expects between $2.1 billion and $2.3 billion in 2026 free cash flow after including additional data-centre spending. Based on the midpoint and its recent share count, the annual dividend would consume roughly 74% of free cash flow. Coverage isn’t luxurious, but it’s considerably more believable than the old arrangement.

Looking ahead

That was in the past. BCE stock is now trying to turn its fibre network, cybersecurity operations, and Bell AI Fabric into a second act. The company plans to build a 300-megawatt (MW) Saskatchewan data centre and has increased its target for artificial intelligence (AI)-powered solutions revenue to approximately $2 billion by 2028.

First-quarter results provided an early hint of that transition. AI-powered solutions revenue more than doubled, while the Ziply Fiber acquisition helped lift internet revenue. BCE stock’s second-quarter report on August 6 should show whether those newer businesses can offset pressure in traditional telecom operations.

BCE stock also trades at about 4.4 times trailing earnings as of writing. That valuation leaves room for recovery if cash flow grows and debt falls, although investors shouldn’t expect a quick return to the former dividend or share price.

Foolish takeaway

Of course, BCE stock still carries substantial debt, while its Saskatchewan facility requires approximately $1.7 billion of incremental capital spending. Fierce wireless competition, regulation, execution problems, or another rise in borrowing costs could slow deleveraging. The dividend isn’t guaranteed simply because management already cut it once.

I’d therefore treat BCE stock as one component of a diversified collection of Canadian dividend stocks, not an entire retirement strategy. Gradual purchases would also leave room to buy if the turnaround becomes messy again.

If BCE stock converts its AI and fibre investments into rising cash flow while reducing debt, today’s 5.8% yield could pay investors to wait through the rebuilding. Retirement may be the destination, but BCE still has several years to make the journey considerably more rewarding.