1 Good Dividend Inventory Down 34% to Purchase and Maintain Eternally

With regards to perfection, it may be arduous to decipher which dividend inventory may really meet that mark. But it won’t be what you suppose. In reality, in relation to actual perfection from shopping for a dividend inventory, you’ll need to discover one factor: worth.

Discovering undervalued dividend shares is what can really imply discovering an organization to spend money on that provides short-term revenue and long-term progress. And in relation to that kind of perfection, BCE (TSX:BCE) suits the invoice.

Reliable revenue

The principle motive that BCE inventory presents sturdy long-term progress is its dividend profile. Whereas the dividend inventory did certainly slice its dividend, it pays about $1.75 per share yearly, yielding round 5.4% as of writing. Subsequently, even with the reduce, it nonetheless pays greater than most blue-chip Canadian dividend shares. In reality, it comfortably offers assured funding certificates (GICs) a run for his or her cash.

What’s extra, the dividend payout is now being supported by free money circulate (FCF). In reality, through the second quarter of 2025, FCF grew 5% 12 months over 12 months to $1.15 billion. Even higher, administration reaffirmed that it could develop 6% to 11% FCF for the complete 12 months. And with capital expenditure (capex) trending down and asset gross sales recycling capital, the dividend is roofed higher than ever earlier than.

Reset in direction of progress

The reset doesn’t simply imply a dividend reduce. BCE has now repositioned itself for money available and future progress. For example, it bought its MLSE stake for $4.5 billion, which funded the Ziply Fiber buy. This exited a non-core asset and moved in direction of high-return tasks.

And the returns certainly look excessive. Ziply Fiber expands the fibre footprint right into a progress market with rising demand for broadband. Whereas there are dangers, it may add big long-term scale. Then there’s Bell synthetic intelligence (AI) Material, which plans as much as 500 megawatts of hydro-powered synthetic intelligence information centres. These faucet into one of many fastest-growing infrastructure themes. Add on its digital-first media arm, with Crave up 29% by way of subscriptions and digital advert income up 9%, and BCE is wanting like a strong progress play.

Nonetheless priceless

Now for one of the best half. This dividend inventory seems extra priceless than ever earlier than. Shares are down about 34% within the final 12 months, with strain on earnings, excessive leverage, and regulatory headwinds. Now, the dividend inventory trades close to multi-year lows, at 11.8 instances earnings.

But with a beta of 0.68, BCE falls into the broader market sell-off slightly than a warranted drop. Subsequently, it may give buyers some defensive enchantment. And now, with the Financial institution of Canada chopping charges to 2.5%, BCE’s debt burden seems much more manageable. Nevertheless, buyers might want to watch the $37.6 billion debt fastidiously, with a debt-to-equity ratio over 200%. But if FCF stays sturdy, refinancing may very well be constructive.

Backside line

BCE inventory isn’t a turnaround story that’s wanting like a near-perfect purchase. It presents a dividend yield of over 5%, bettering FCF, and a defensive market place. That dividend may usher in $382 from a $7,000 funding as of writing!

However past dividends, there’s big progress sooner or later from AI infrastructure and fibre. For buyers who desire a buy-and-hold dividend inventory, BCE suits the invoice, particularly at this priceless worth.