BCE Dividend Seen as De-Risked; BMO Upgrades Stock to Outperform

BMO Capital Markets has raised its rating on BCE Inc. to Outperform, citing a reduced risk profile for the telecom giant's dividend. In a research update, analysts pointed to improving cash-flow dynamics, clearer capital allocation priorities and operational stability across BCE's wireless and broadband businesses as reasons the payout looks safer than before.

The research note highlights that recent execution on cost controls and a more measured pace of large capital projects have together helped free up cash that can support the dividend without compromising network investment. BMO also flagged stable subscriber trends in wireless and internet services, which underpin predictable revenue streams and reduce downside risk to distributable cash over the near to medium term.

BMO’s upgrade reflects a shift in the firm's assessment of BCE's risk/reward balance: while telecom remains capital-intensive, management’s efforts to prioritize returns to shareholders and optimize spending have increased the likelihood that the dividend will be sustained. The firm said this change in conviction warrants re-rating BCE relative to peers and the broader market.

For income-focused investors, the upgrade is meaningful because it suggests lower probability of a dividend cut and supports the case for BCE as a core yield holding. That said, BMO noted that execution risk around large network buildouts — such as fibre rollouts — and macroeconomic pressures still merit monitoring. The upgrade does not imply the absence of risk, only that the probability of dividend stress has declined in the view of the analysts.

Investors should weigh BMO’s view alongside other factors including regulatory developments, competitive dynamics and BCE’s capital allocation choices going forward. As always, diversification and an investment horizon aligned with income and capital preservation goals remain key when positioning around dividend-paying telecom stocks.