Is BCE Stock a Buy?

BCE stock (TSX:BCE) has seen shares drop as it feels pressure from all sides, so is the stock a buy for long-term holders?

| More on:

It’s a great question. BCE (TSX:BCE) has been in a very interesting position lately as the stock continues to trade fairly low compared to its 52-week highs. So today, let’s look at what’s been going on with BCE stock, and whether it’s a great deal, or just a dud.

What happened

There have been a few things going on with BCE that investors should be aware of. First off, the company has seen its competition increase against rival telecommunications company Rogers (TSX:RCI.B) as it looks to take over Shaw Communications (TSX:SJR.B). Such a merger would put enormous pressure on Canada’s largest telecom business. And yet, it’s not all the company has to deal with.

BCE has also been under pressure owing to changes made by the Canadian Radio and Television Commission (CRTC). The CRTC has made a few changes lately that BCE stock frankly isn’t too fond of. And BCE’s response? It claims the regulator’s “priorities are backwards.”

Why so glum, chum?

BCE is already at odds with the CRTC over changes that recently affected its guidance. The CRTC stated these larger companies must provide access to smaller wireline and wireless producers to increase competition. This caused the company to lower its expectations for growth through 2025. Originally, it hoped to increase customers from seven million in 2023 to nine million by 2025, but that dropped down to 8.3 million.

More recently, the CRTC stated a news fund would be created to provide money to broadcasters, and require foreign streamers to contribute to the subsidy. BCE stock stated they should therefore exempt Canadian streamers, like Crave. This is now going to be looked at in a hearing next week, in order to push Canadian content.

“Your priorities are backwards,” Jonathan Daniels, Bell Canada vice-president of regulatory law stated. “Traditional broadcasters, the linchpin of the Canadian broadcasting system, need relief and we need it now.”

BCE stock is hurting

It’s more bad news for the company, which already had to lay off 1,300 employees during its recent earnings report. It also shut or sold nine radio stations, and closed two foreign bureaus as financial pressure increases. BCE is now filing an application to appeal all these CRTC decisions, arguing in the end it will hurt Canadian content, not promote it.

So what does this mean for investors? Honestly, BCE stock is going through hard times but they’re not going to kill the company. While it might prove a difficult time, eventually it will recover. It remains the largest of the Canadian telecom giants, even with a potential merger. Therefore, now could in fact be a deal for long-term investors.

Investors can now grab a 7.18% dividend yield, with shares down 15% in the last year. Yet be warned. There is likely to be more bumps on the way. So unless you’re in for the long haul, perhaps wait on the sidelines for now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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

More on Dividend Stocks

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »

how to save money
Dividend Stocks

Got $1,000? The 3 Best Canadian Stocks to Buy Right Now

If you're looking for some cash flow from your $1,000 investment, these are the ideal investments to make.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

A Dividend Giant I’d Buy Over BCE Stock Right Now

Don't get sucked in by BCE's 10% dividend -- the stock is a total yield trap. Buy this instead.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Consider Sienna Senior Living for a Stable Monthly Income

Buying this Canadian dividend stock could help you build a dependable monthly income portfolio for the long term.

Read more »