BCE (TSX:BCE), one of Canada's telecom giants, has seen its stock slide significantly in 2024. Now many investors are left scratching their heads about why. With a sharp decline of nearly 30% over the past year, BCE stock has hit 52-week lows, now trading at levels unseen in years. Yet, for dividend seekers, this price drop might signal an opportunity to lock in an eye-catching yield of over 10%. Let's dive into why BCE's stock has fallen so far, and whether this iconic company is worth buying now.

What happened

The troubles for BCE stock largely stem from a combination of factors. Those include declining revenue in key segments, intensifying competition, and broader economic pressures. In its latest earnings report for the third quarter of 2024, BCE stock revealed a $1.2 billion net loss, driven by a massive $2.1 billion non-cash asset impairment related to its media operations. This write-down reflects the growing struggle traditional media faces as advertising dollars shift to digital platforms. As BCE stock owns media brands such as CTV and Bell Media, it has had difficulty adapting to these digital-first trends, thus creating a drag on its overall performance.

Beyond the write-down, BCE stock's revenue took a hit as well. Total revenue for Q3 dropped by 1.8%, with much of this decline tied to a 14.3% slump in low-margin product sales. Its wireless segment, a key growth driver in recent years, has also faced headwinds as competition has ramped up among Canadian telecom providers. With customers hunting for better deals, BCE stock has struggled to maintain its pricing power, thus putting further pressure on its top line.

The numbers

Despite these revenue challenges, BCE stock managed to maintain strong operational efficiency. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 2.1% year-over-year, with margins climbing to 45.6%. This was the highest in over 30 years. It shows that while revenue streams are under pressure, BCE stock is working hard to trim costs and run its business more effectively. For long-term investors, this operational strength could be a silver lining, thereby suggesting the company is better positioned than it may seem at first glance.

Still, for income investors, BCE stock's dividend yield is hard to ignore. The company recently reaffirmed its commitment to maintaining its dividend. This currently sits at an eye-popping 10.99%. While its payout ratio exceeds 100%, BCE stock has historically maintained its dividend even during difficult times. Its free cash flow of $3 billion over the past year suggests it has enough liquidity to keep paying shareholders for the foreseeable future. Although risks remain if cash flow dips further.

Looking ahead, BCE stock's future hinges on its ability to transition effectively into the digital age. The company's investment in 5G and fibre optic networks could eventually pay off, thereby giving it a competitive edge in providing high-speed connectivity. Moreover, as traditional media continues to struggle, BCE stock may shift its focus further toward streaming and other digital offerings to offset declines in its legacy businesses. The question is whether these efforts will be enough to reverse its revenue declines and reignite investor confidence.

Foolish takeaway

Valuation-wise, BCE stock now trades at a forward price-to-earnings (P/E) ratio of 12.7, significantly below its historical average. This suggests that much of the bad news may already be priced in. Compared to its peers, BCE stock looks attractively valued, particularly given its market-leading position in telecom and media. However, investors should weigh the risks carefully, particularly around debt levels and ongoing revenue pressures.

So, is BCE stock a buy now? If you're a long-term investor looking for stability and an income-focused portfolio, BCE stock's dividend yield may be worth the risk. That said, the company is not without challenges. It will need to prove it can adapt to shifting industry dynamics and manage its debt effectively in a high-rate environment. For those willing to stomach some uncertainty, BCE stock offers the potential for steady returns. But if you're after strong growth, this telecom giant might still have a bit further to fall before it finds its footing.