A Cheap Canadian Dividend Stock I’d Buy in February

A dividend stock looks cheap when the market punishes it harder than its long-term cash power deserves. You usually see a higher yield, a lower earnings multiple, and plenty of grumbling in the headlines. The trap is that “cheap” can really mean “stressed,” so you need to check whether the dividend still fits the business, not just whether the price looks like a bargain. So, where does BCE (TSX:BCE) fit in?

BCE

BCE is one of Canada’s telecom heavyweights, with Bell’s wireless, fibre internet, and media assets sitting under the umbrella. It sells the kinds of services people keep paying for even when budgets tighten, which is why income investors keep coming back to it. Still, the last year reminded everyone that telecom does not equal risk-free, especially when competition heats up and debt costs stay sticky.

The rough stuff has been very real. BCE cut its dividend in 2025, slashing the annual payout to $1.75 per share from $3.99, and the stated reason came back to balance sheet strain and a payout that had gotten out of line with fundamentals. That kind of reset can feel brutal in the moment, but it also stops the bleeding and gives management room to rebuild credibility.

BCE also went through a messy reset year that included reshaping the asset base and taking actions to strengthen cash flow. One headline move was selling its minority stake in Maple Leaf Sports and Entertainment to Rogers for $4.7 billion, or $4.2 billion net of taxes. This helped it sharpen capital allocation and focus on the core telecom engine. It also leaned into a U.S. growth angle with the Ziply Fiber acquisition, which adds both opportunity and execution risk.

Earnings support

Numbers-wise, these have been smart moves. In Q4 2025, BCE reported net earnings of $632 million and adjusted net earnings of $643 million, while adjusted earnings per share (EPS) came in at $0.69, down 12.7% year over year. Revenue held essentially flat in the quarter at $6.4 billion, and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 2.3% to $2.7 billion. It also boasted an adjusted EBITDA margin of 41.6%, which it called its highest Q4 margin in more than 30 years.

The full-year picture looked sturdier on cash flow than the quarter did. BCE said 2025 free cash flow (FCF) rose 10% to $3.2 billion. The dividend story now lives and dies on FCF, not on nostalgia for the old payout. BCE’s 2026 outlook also flagged a likely drop in adjusted EPS, even as it aims for higher adjusted EBITDA and higher free cash flow. This tells investors the plan leans on cost discipline and cash conversion, not a sudden surge in profits.

For 2026, BCE is basically asking the market to judge it on execution. It guided to 1% to 5% revenue growth and 0% to 4% adjusted EBITDA growth. It also set a cost-savings goal of $1.5 billion by 2028, which could be a real catalyst if it actually shows up in the quarterly run rate. The dividend stock now has a forward annual dividend of $1.28 and a forward yield around 5%. That yield can be tempting, but you need to remember what you are buying: a capital-intensive business that must keep investing in fibre and wireless while managing regulatory pressure and competitive pricing. Even so, here is what $7,000 could bring in, as an example.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTBCE$35.16199$1.75$348.25Quarterly$6,996.84

Bottom line

So could BCE be a buy for others in February? It could, if you want a battered blue chip with a reset dividend, improving cash flow focus, and a clear plan to rebuild confidence. It could also be a pass if you want smooth sailing, because BCE still has to prove it can grow cash flow while funding heavy network spending and competing in a tight Canadian telecom market. If you buy it, buy it for the turnaround in cash discipline, not for the memory of the old yield.

The post A Cheap Canadian Dividend Stock I’d Buy in February appeared first on The Motley Fool Canada.

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More reading

• The Railway and Telecom Stocks Everyone’s Writing Off — Too Soon?
• 2 Bruised Dividend Titans Worth Buying on the Cheap
• What’s Happening With BCE’s Dividend?
• 1 Dividend Great I’d Buy Over Telus or BCE Stock Today
• Has BCE Stock Finally Hit Rock Bottom?

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.