Is BCE Stock (Finally) a Buy for its 5.5% Dividend Yield?

Buying a blue-chip stock when it’s down, especially a name like BCE (TSX:BCE), can be a great idea for any investor, if you’re willing to take some risk. That’s because you’re essentially getting a proven, stable business at a discount while its dividend yield rises in your favour.

These companies have long histories of surviving recessions, rate cycles, and industry changes, so temporary drops often reflect short-term pressures rather than long-term damage. When the fundamentals remain strong, buying during weakness can lock in bigger income. From there, it positions you for solid upside once conditions normalize.

BCE

BCE has faced a tough few years as rising interest rates hit the entire telecom sector hard. Because BCE stock carries significant long-term debt to fund its network infrastructure, higher borrowing costs squeezed profitability and made expansion more expensive. At the same time, regulatory pressures and slower subscriber growth added stress to operations, widening the gap between financial expectations and actual results.

Investors responded by pushing the stock down sharply, making it one of the worst-performing TSX blue chips over the last two years. BCE stock also faced challenges with declining wireline revenue, higher operating expenses, and intensified competition among wireless carriers.

BCE’s media division struggled as well, with advertising weakness and structural declines in legacy broadcasting weighing on results. These pressures combined to produce a rare period of stagnation for a company once seen as one of the most reliable income stocks in Canada. The sentiment shift was dramatic, leaving BCE stock trading at valuation levels not seen in more than a decade.

Numbers don’t lie

Recent earnings showed a mixed but stabilizing picture. Revenue held fairly steady, with wireless still showing pockets of strength. BCE stock continued to generate solid free cash flow despite the challenging environment. Cost reductions, efficiency programs, and ongoing network improvements helped offset some of the margin compression caused by inflation and higher interest expenses. While profit growth remains slow, the earnings demonstrated that BCE’s core operations are stabilizing rather than deteriorating.

The latest quarter also signalled early signs of improvement in subscriber trends and hinted at better cash-flow visibility heading into the next fiscal year. Management reaffirmed its cash-flow and capital-spending outlook. This gave investors more confidence that the company can maintain its dividend and manage its debt effectively. While growth may not be explosive, BCE stock’s consistency and large customer base continue supporting dependable operating income.

BCE stock could finally be a buy for its dividend yield. The payout is now among the highest of any Canadian blue chip, largely due to the share price decline, not a decline in fundamentals. For long-term investors, this means an opportunity to lock in a historically high yield from a company that has paid dividends for more than 100 years. As interest rates eventually ease, BCE stock’s debt costs will fall, profitability will recover, and investor sentiment will likely swing back in its favour. That combination of income, stability, and eventual valuation recovery makes BCE a compelling pick for anyone seeking long-term dividend power.

Bottom line

The stock’s current weakness creates a rare entry point for investors. You’re getting BCE stock at a discount, which can bring in ample income. In fact, here’s what $7,000 has to offer.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDEND TOTAL ANNUAL PAYOUTFREQUENCYTOTAL INVESTMENTBCE$32.32216$1.75$378.00Quarterly$6,982. 12

Meanwhile, investors continue collecting a sizeable income stream backed by essential services Canadians use every day. For patient investors, that setup is hard to ignore.

The post Is BCE Stock (Finally) a Buy for its 5.5% Dividend Yield? appeared first on The Motley Fool Canada.

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More reading

• BCE Stock: Buy, Sell, or Hold?
• 2 Blue-Chip Dividend Stocks Offering 6% Yields
• 1 Outstanding Canadian Dividend Stock Down 10% to Buy and Hold for Years 
• 9% Yield: Is Telus’s Dividend Safe?
• Better Dividend Stock for 2026: BCE or Telus? 

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.