News
October 18, 2025
Down 28% But Still a Perfect Buy for Long-Term Passive Income
A falling dividend stock can be a buying opportunity, so here’s why drops can boost yield and why BCE’s pullback may be a chance for income investors.The post Down 28% But Still a Perfect Buy for Long-Term Passive Income appeared first on The Motley Fool Canada.
BCE, one of Canada's largest telecommunications companies, has seen its stock price tumble by 28%, a decline that might send shivers down the spines of some investors. However, for those seeking long-term passive income, this dip could represent a golden opportunity. The recent pullback in BCE's stock price, while concerning on the surface, has actually made its dividend yield significantly more attractive.
When a stock price falls, the dividend yield – the percentage of a stock's price that it pays out in dividends each year – increases. This is because the dividend payment remains the same, but it's now being distributed across a lower share price. Therefore, investors who buy BCE shares now will effectively be locking in a higher yield than those who bought when the stock was trading at its peak.
This phenomenon makes dividend stocks like BCE particularly appealing during periods of market volatility. While the short-term price fluctuations can be unsettling, the consistent dividend payments provide a steady stream of income, regardless of the stock's current value. This is especially beneficial for investors looking to generate passive income to supplement their retirement savings or other financial goals.
BCE's established position in the Canadian telecommunications market further strengthens its appeal as a long-term investment. The company provides essential services like internet, phone, and television to millions of Canadians, making it a relatively stable and predictable business. While the telecommunications sector is subject to competition and technological changes, BCE has a proven track record of adapting and innovating to maintain its market share.
Of course, investing in any stock involves risk, and BCE is no exception. It is crucial for potential investors to conduct their own thorough research and consider their individual financial circumstances before making any investment decisions. Factors to consider might include the company's debt levels, the competitive landscape, and any potential regulatory changes that could impact its business.
However, for those who are comfortable with the risks and have a long-term investment horizon, BCE's current discounted price and enhanced dividend yield could make it a compelling addition to a passive income portfolio. The 28% drop, while seemingly negative, has created a potential window for savvy investors to capitalize on a reliable dividend payer at a bargain price.
When a stock price falls, the dividend yield – the percentage of a stock's price that it pays out in dividends each year – increases. This is because the dividend payment remains the same, but it's now being distributed across a lower share price. Therefore, investors who buy BCE shares now will effectively be locking in a higher yield than those who bought when the stock was trading at its peak.
This phenomenon makes dividend stocks like BCE particularly appealing during periods of market volatility. While the short-term price fluctuations can be unsettling, the consistent dividend payments provide a steady stream of income, regardless of the stock's current value. This is especially beneficial for investors looking to generate passive income to supplement their retirement savings or other financial goals.
BCE's established position in the Canadian telecommunications market further strengthens its appeal as a long-term investment. The company provides essential services like internet, phone, and television to millions of Canadians, making it a relatively stable and predictable business. While the telecommunications sector is subject to competition and technological changes, BCE has a proven track record of adapting and innovating to maintain its market share.
Of course, investing in any stock involves risk, and BCE is no exception. It is crucial for potential investors to conduct their own thorough research and consider their individual financial circumstances before making any investment decisions. Factors to consider might include the company's debt levels, the competitive landscape, and any potential regulatory changes that could impact its business.
However, for those who are comfortable with the risks and have a long-term investment horizon, BCE's current discounted price and enhanced dividend yield could make it a compelling addition to a passive income portfolio. The 28% drop, while seemingly negative, has created a potential window for savvy investors to capitalize on a reliable dividend payer at a bargain price.
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Business