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The year 2024 started on a positive note with hopes of interest rate cuts. However, delays in announcing the rate cut caused the price of this great dividend stock to fall by 8.6%. BC (TSX:BCE) shares have hit a new low of $49.15. The last time the stock traded below $50 was 10 years ago, in 2014. Is this drop a once-in-a-lifetime opportunity to buy a value stock and lock in an 8.11% return for a long time? Let's find out.
Why Did This Great Dividend Stock Fall 8.6%?
ECB shares have been falling since April 2022, when the interest rate hike began. While other stocks hit by high interest rates saw some recovery, the ECB continued to slide and hit a 10-year low. The stock has fallen 33% from its April 2022 high. The reason for this drop is more than just high interest rates. The telecom company has been in the news for quite some time as it is at loggerheads with the telecom regulator.
In November 2023, the Canadian Radio-television and Telecommunications Commission (CRTC) announced a decision requesting Telus and Bell to give competitors temporary access to their fiber-to-the-home networks in Ontario and Quebec. Now, telecom companies spend billions of dollars to build the fiber network. This investment is beneficial as they can charge more for Internet services in an oligopolistic market. Canada has some of the most expensive data packages, as telecommunications rates are unregulated.
BCE appealed the regulator's temporary ruling in federal court, saying the ruling discourages investment in the grid. To oppose the ruling and put pressure on the regulator, the ECB announced plans to reduce its investment in networks by $1.1 billion between now and 2025, reaching only 8.3 million locations instead of the nine million previously planned.
BCE is also restructuring the business, moving away from highly regulated and slow-growing businesses towards new growth areas of digital transformation, advertising, cloud and security services. It cut 1,300 jobs in June 2023 and is likely to cut 4,800 more jobs as it sells some radio stations and The Source stores. The job cuts have worried the CRTC.
BCE is a screaming buy
In light of government policy uncertainty and massive restructuring, the ECB has offered a weaker outlook for 2024. It expects its free cash flow to fall by between 3% and 11% as massive job cuts will generate a single severance payment.
All this has reduced the ECB's share price. If the telecom company manages to overturn the CRTC decision, its shares could rise by double digits. Additionally, interest rate cut announcements will also push stocks higher. Now is the time to buy these dividend stocks at their core. The company continued to increase its dividend at a slower pace of 3.1% from 5% previously.
The telecommunications company will benefit from the 5G revolution that will connect more devices to the Internet and significantly expand the ecosystem. This secular trend will keep the ECB's long-term growth intact.
