A major change has been announced for the S&P/TSX Canadian Dividend Aristocrats Index. That change is that BCE Inc (TSX: BCE), more commonly known as Bell, has been removed from the index.
The removal of BCE follows the company being forced to cut their dividend as a result of a weak balance sheet. The company on May 8 was forced to reduce their dividend from $3.99 a share on an annualized basis to $1.75 on an annualized basis in order to balance capital allocation and support deleveraging efforts. BCE is currently targeting a net debt leverage ratio of 3.5x Adjusted EBITDA by 2027, with that figure currently sitting at 3.56x.
READ: BCE Slashes Dividend by 56% in Q1 2025, Announces Deal To Expand Into US
“There are a number of significant changes in our economic and operating environments that have occurred since the Fall of 2024 that we need to address. We have made the appropriate decision to adjust our annualized dividend to $1.75 per common share to strengthen our balance sheet while maintaining flexibility in the context of economic uncertainty,” commented Mirko Bibic, CEO of BCE, when announcing the dividend reduction.
Dividend policy at BCE has also changed, with the payout range said to be between 40% and 55% of free cash flow, while a program offering discounted treasury issuances under a shareholder dividend reinvestment and stock purchase plan has been cancelled.
The Canadian Dividend Aristocrats Index is an index of companies that have followed a policy of stable or increasing dividends every year for at least five years. The index as of Friday has 90 constituents, of which BCE was the largest by index weight.
Fiera Capital Corporation (TSX: FSZ) was also removed from the index, with that corporation being the sixth largest constituent by weight.
The changes are expected to take effect on June 2.
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