BCE Inc: A Telecom Stock Backed by Almost 700 Institutions
February 14, 2025
A 12.36%-Yielding Canadian Telecom Stock
Telecom stocks might not get much attention these days, but, mark my words, they are the unsung heroes that make sure our world keeps on humming…digitally. These companies provide critical infrastructure that keeps us connected.
For income investors, telecom stocks could be great place to be. If an investor is patient, they could get decent, consistent dividends, and impressive capital appreciation over time. That’s because these companies tend to have revenues that are driven through subscription and have a massive customer base.
One telecom stock that could be worth looking at is BCE Inc (NYSE:BCE). The stock has fallen out of favor recently, but it presents a great opportunity.
Now a little about the company…
A Canadian Telecom Stock Giant
BCE, based in Montreal, Quebec, Canada, offers wireless, wireline, internet, and TV services to residential, business, and wholesale customers in Canada. More commonly just known as Bell Canada or Bell, it operates through two business segments: Bell Communication and Technology Services and Bell Media.
The Bell Communication and Technology Services segment provides wireless products and services and wireline products and services, comprising data and satellite TV and connectivity services. This segment of BCE also buys and sells local telephone, long-distance, and data services, and other services, from or to resellers and other carriers. In addition, it operates consumer electronic retail stores.
The Bell Media segment of the company offers conventional TV, specialty TV, pay TV, streaming, digital media, radio broadcasting, and out-of-home advertising services. (Source: “Profile.,” Yahoo! Finance, last accessed February 11, 2025.)
Breaking 30+ Years of Financial Records
BCE stock has had a rough past few months as investors panic-sold thinking that the company’s financials would struggle. There certainly has been some pain here, with BCE’s financial performance being slightly anemic, but the company is showing resilience. That’s what makes it a compelling opportunity.
On February 6, this Canadian telecom company reported its financial results for the 2024 fourth quarter and full year. Notably, BCE achieved all of its non-revenue and revised revenue guidance for 2024.
Regarding profitability, Mirko Bibic, the company’s president and chief executive officer, said, “Through our disciplined approach, we achieved all of our non-revenue targets for 2024 and were also within our revised revenue guidance objective. We also achieved our highest annual adjusted EBITDA margin in over 30 years at 43.4%.” (Source: “BCE reports 2024 Q4 and full-year results, announces 2025 financial targets,” BCE Inc, February 6, 2025.)
Going forward, BCE is focused on generating revenue growth, managing costs, and prioritizing capital allocation. This could mean a better financial performance in 2025, and beyond.
Telecom Stock Boasts a Robust Dividend History
As there’s some stability in financial performance at BCE, this telecom stock could represent a great place for income investors to park their money.
At the current price, BCE stock has a dividend yield of 12.36%, paying $2.78 per share.
In late 2024, BCE announced that it would be pausing its dividend growth until payout and debt measures start a downward trend. The company didn’t provide much of a timeline on this pause, which suggests that it is being prudent and keeping long-term shareholder value in mind.
However, it’s worth noting here that, despite the recent turbulence, BCE is a great dividend stock. Over the past few decades, its dividends have grown significantly. In early 2010, BCE’s quarterly dividend payment was $0.42; now it’s $0.73 per share. This represents an increase of 73% over the past 15 years. Impressive.
The Lowdown on BCE Inc
The past six months or so have been very difficult for this telecom stock. However, the company’s management is sending a very clear message that it isn’t just sitting idle, but is focused on getting its financial performance in order.
The dividends with BCE stock have been impressive. Although they’re currently on pause, as the company’s financial performance improves, it wouldn’t be shocking to see this Canadian telecom stock start paying higher dividends.
Lastly, BCE is still trusted by institutional investors. As per the most recent data, close to 700 institutions own 41.38% of all outstanding shares. Royal Bank of Canada, Bank of Montreal, and CIBC World Markets are the top three holders of BCE stock.
