1 Excellent Dividend Inventory Down 34% to Purchase and Maintain Without end

In terms of perfection, it may be exhausting to decipher which dividend inventory might truly meet that mark. But it may not be what you assume. In reality, in terms of actual perfection from shopping for a dividend inventory, you’ll wish 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 earnings and long-term progress. And in terms of that sort of perfection, BCE (TSX:BCE) matches the invoice.

Reliable earnings

The principle motive that BCE inventory provides robust 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 minimize, it nonetheless pays greater than most blue-chip Canadian dividend shares. In reality, it comfortably provides assured funding certificates (GICs) a run for his or her cash.

What’s extra, the dividend payout is now being supported by free money circulation (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 total 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 minimize. BCE has now repositioned itself for money available and future progress. For example, it offered 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 initiatives.

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 might add large 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 subscriptions and digital advert income up 9%, and BCE is wanting like a stable progress play.

Nonetheless invaluable

Now for the most effective half. This dividend inventory seems extra invaluable 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 occasions earnings.

But with a beta of 0.68, BCE falls into the broader market sell-off reasonably 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 robust, refinancing could possibly be constructive.

Backside line

BCE inventory shouldn’t be a turnaround story that’s wanting like a near-perfect purchase. It provides a dividend yield of over 5%, enhancing FCF, and a defensive market place. That dividend might herald $382 from a $7,000 funding as of writing!

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