With several well-known Canadian dividend stocks across industries such as banking, energy, utilities, and materials trading close to their recent peaks, Canadians have fewer opportunities to find attractively valued income stocks. Still, some dividend-paying companies have pulled back notably, creating opportunities for long-term investors seeking a more reasonable entry point.
BCE (TSX: BCE) is one company that has declined significantly. The Canadian telecommunications company’s shares are down roughly 10% so far this year and have dropped about 22% from their 52-week peak of $36.25. The recent weakness has brought the stock back into focus, especially for investors looking for a dividend-paying company at a lower valuation.
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Is BCE’s dividend reliable?
BCE used to be a go-to dividend stock for Canadian investors. For years, the telecom giant steadily increased its dividends, making it a top investment for passive income-focused portfolios. However, that reputation was shaken when the telecom giant cut its annualized dividend from $3.99 to $1.75 per share last year. The reduction reflected growing pressure from fierce competition, rising costs, regulatory challenges, and a heavy debt burden.
Instead of continuing with a payout that was becoming difficult to sustain, BCE opted to lower its dividend and redirect more cash toward debt repayment and business investment. Management now aims for a free cash flow payout ratio of 40% to 55%. In the first half of 2026, the company distributed about $394 million less in dividends than during the same period a year earlier, creating additional financial flexibility.
Looking ahead, BCE’s payouts look more sustainable. Multiple drivers could support its dividend. Its operations span wireless services, broadband, fibre, media, cybersecurity, cloud computing, and AI-related enterprise solutions, providing multiple sources of revenue.
Recent results also point to resilience in its core businesses. BCE added almost 55,000 fibre-to-the-home customers in the second quarter, while internet revenue increased 14.2% year over year. Wireless operations also improved, with postpaid churn declining to 1% and more than 41,000 net postpaid phone additions.
Artificial intelligence (AI) is another emerging growth area, with AI-related revenue rising 29% as demand for cybersecurity and enterprise solutions increased. Meanwhile, Crave subscriptions grew 23% year over year to nearly 5.1 million, supporting Bell Media’s digital strategy.
Going forward, stronger wireless pricing, AI growth, the Ziply Fiber acquisition, improved media performance, and cost savings could help lift cash flow. All of this suggests BCE has room to reduce debt and support its current dividend.
The bottom line
BCE’s pullback from its 52-week high improved its risk-reward profile for investors seeking dividend income. The current dividend appears more aligned with BCE’s focus on strengthening free cash flow, reducing debt, and funding business investment. Encouraging trends in fibre, wireless, AI-related services, and digital media are expected to provide additional support for earnings and cash generation.
Overall, BCE has greater capacity to maintain its current payout while improving its financial position. At present, BCE pays a quarterly dividend of $0.44 per share, which represents a yield of approximately 6.2% based on a closing share price of $28.35 on October 1.
With an attractive yield and a more sustainable payout ratio, BCE is a compelling stock for income-focused investors to buy right now.
