BCE (TSX: BCE) has continued to be a tough hold through 2026, with shares down just over 5% year-to-date. Still, things could have certainly been a lot worse, especially when you consider how disastrous prior years were. In any case, the negative momentum has seemingly slowed, even though the roller-coaster ride of ups and downs continues to punish investors attempting to catch a bottom.
In any case, traders have certainly been able to make money by loading up on dips and selling into the rips as shares have seemingly rolled down a roadbump-covered hill lower. While I have zero idea as to whether BCE stock has a bottom yet, I do think that the name is closer to a bottom than the top. Shares are down around 58% from all-time highs, so that’s a pretty safe bet, in my view.
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Moving beyond BCE’s dividend cut
While the BCE dividend cut has been at the top of investors’ minds for over a year now, I do think that the dividend that exists today (it’s a 5.8% yield now) is more than worth going after. In fact, I’d argue that BCE’s near-6% yield is one of the most robust of the dividend heavyweights today. And while the dividend cut in the rearview might be troubling to some, I’d argue that it’s more about the path ahead than the road behind.
For those willing to look to the new year and beyond, I think BCE has a value proposition that’s tough to ignore. Yes, the shares have a reputation as a recent dividend cutter, but, in my view, the price of admission is absurdly low, with analyst expectations that are also quite low and perhaps easy to surpass moving forward if management can execute.
Looking into the new year, I’m more inclined to view BCE as more of a buy than a hold or a sell. And it has more to do with just the low price of admission.
Managing debt and the new growth drivers are a must
Remember that buying a stock just because it’s cheap might not be the best move, especially if there are serious growth issues or risks that could erode the fundamentals over time. When it comes to BCE, I think the firm can start gaining ground if it’s able to effectively manage its debt load, which, as you’re probably aware, will become more burdensome with every interest rate increase from the Bank of Canada.
The good news is that the dividend reduction has allowed BCE more room to manage debt while financing efforts to get growth moving in the right direction. Whether it’s the U.S. fibre push or moving into AI infrastructure (an underrated move, in my view), BCE isn’t just sitting still as wireless competition across the country stays heated.
In any case, I’m more comforted by more capital being put into AI investments as the demands of telecom infrastructure look to ease. While data centres don’t have the best rap, I do think it’s a mistake to dismiss the potential growth prospects of getting into AI infrastructure in the Canadian market. It could prove incredibly lucrative, especially if AI proves more than a bubble.
The 5G buildout was not cheap. And while the AI buildout won’t be either, I do think that data centres could jolt growth and pave the way for that eventual shift into 6G wireless and, of course, satellite connectivity. For the most part, I like the setup for the next five years, and that makes me view the troubled stock as a great buy for 2027.
