Don’t Buy BCE Stock Until This Happens

Telecoms can look like safe and stable buys that pay you to wait. However, don’t buy a telecom just because it looks “cheap.” Telecoms sell essentials, but carry heavy debt and constant network spending, so one bad stretch can squeeze cash flow fast. Price wars, regulation, and rising interest costs can hit at the same time. The dividend matters, but the balance sheet matters more, as a stressed telecom can cut payouts, sell assets, or dilute investors. Your job is to check whether cash flow covers the dividend after capital spending, and whether leverage trends lower even when competition heats up. So, where does BCE (TSX:BCE) sit?

BCE

BCE stock sits at the centre of Canadian connectivity. It owns Bell Canada and sells wireless, internet, fibre, and business services, plus a media arm through Bell Media. Over the last year, BCE stopped playing defence and started rebuilding in public. In May 2025, it cut its annualized dividend to $1.75 per share from $3.99, effective with the second-quarter (Q2) 2025 dividend. That move hurt income investors, but it admitted the math and freed up cash for debt reduction and core network priorities.

The biggest headline came from the U.S. BCE stock completed the acquisition of Ziply Fiber on Aug. 1, 2025, paying $5 billion in cash and assuming about $2.6 billion of net debt. Ziply gives BCE a faster-growing fibre footprint in the Pacific Northwest and a new way to grow beyond Canada’s mature market. It also adds integration risk and execution pressure at a time when investors want steady results, not more moving parts.

To help fund the plan, BCE stock also sold a prized stake. In July 2025, it concluded the sale of its minority interest in Maple Leaf Sports and Entertainment. That sale supported the financing around the Ziply deal and signalled a harder focus on balance sheet repair. Put it together and the last year looks like a reset: lower dividend, bigger fibre bet, and fewer non-core assets.

Earnings support

Earnings show why this remains a rebuild, not a victory lap. In Q3 2025, BCE stock reported operating revenues of $6.049 billion and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2.762 billion. Adjusted earnings per share (EPS) came in at $0.79, and free cash flow improved to $1.003 billion. Those numbers highlight early benefits from cost control and Ziply’s contribution, but it doesn’t erase the drag from slower legacy lines and a choppy media business.

BCE stock has also tried to restore credibility with a clearer roadmap. At its October 2025 investor day, it laid out a plan centred on sustainable free cash flow, cost savings, and deleveraging. BCE stock targets a long-term dividend payout range of 40% to 55% of free cash flow and aims to bring its net debt leverage ratio down to 3.5 times by the end of 2027.

Valuation gives the stock a case, but only if execution holds. It currently trades at just 5.4 times earnings after all. That can look compelling beside its history, yet low multiples often reflect real risk. So, here is what needs to happen before I would call it a clean buy. Free cash flow must cover the dividend comfortably after capital spending. If those line up for a couple of quarters, the stock can re-rate without heroics. Yet even now, here’s what $7,000 can bring in while you wait.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTBCE$36.03194$1.75$339.50Quarterly$6,989.82

Bottom line

So, yes, BCE stock could be a buy for patient income investors who accept a multi-year turnaround and can tolerate ugly headlines along the way. It could also be a pass for anyone who needs reliability right now, as the company is still proving that the new dividend and the U.S. fibre bet can coexist with debt reduction. If you want to own it, wait for the boring evidence of steadier cash flow, visibly lower leverage, and fewer “one-time” fixes. That is when the risk/reward scenario finally flips.

The post Don’t Buy BCE Stock Until This Happens appeared first on The Motley Fool Canada.

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More reading

• BCE Stock: A Lukewarm Outlook for 2026
• What’s Going On With BCE’s Dividend?
• Top Canadian Stocks to Buy Right Now With $5,000
• 2 Safer, High-Yield Dividend Stocks for Canadian Retirees
• Don’t Buy Telus Stock Until This Happens

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.