The market has stellar long-term picks that can provide a healthy (and growing) dividend income for decades. One of those long-term picks also happens to be an undervalued dividend stock that is worth buying right now.

In case youâre wondering about that undervalued dividend stock, itâs BCE (TSX:BCE) and hereâs why you should consider buying it today.

First, an introduction

Most investors are familiar with BCE. BCE is one of the largest, if not the largest telecom in Canada. The company offers subscription-based services to its customers across multiple segments.

Those broad areas include wireline, wireless, TV and Internet services, all of which boast some defensive appeal. That defensive appeal translates into a predictable revenue stream that allows the company to invest in growth and pay out a handsome dividend.

The company also boasts a large media segment, which includes both TV and radio stations that blanket the country. That segment provides an additional yet complementary revenue stream to its core subscription business.

Despite that appeal and reliable revenue, BCE has seen its share price drop 12% year-to-date and a whopping 27% over the past two years. Thatâs made BCE the undervalued dividend stock to consider right now.

Why is BCE down, and does it matter?

BCEâs troubles arguably began in 2022. Thatâs when the Bank of Canada started hiking interest rates. Those hikes made the cost of borrowing more expensive, and telecoms like BCE hold massive amounts of debt.

In other words, as interest rates surged, BCE started to see earnings take a dip. And to be clear, itâs not just BCE that is feeling this interest rate-fueled dip. All of Canadaâs big telecoms are down this year.

One key difference however is that BCE has already made steep cuts to its operations this year to offset those losses. BCE announced a whopping 9% cut to its workforce earlier this year. That works out to approximately 4,800 positions and includes shuttering some media outlets around the company.

The move is expected to save up to $200 million this year, and upwards of $200 million annually next year.

For prospective investors looking at this undervalued dividend stock, there are a few key takeaways.

First, BCE trades at a discount right now, but itâs not alone in the market.

Second, BCE is making the necessary and often painful changes to return to a position of growth, which will take time. It will also mean interest rates need to drop, which we noticed in recent weeks has finally started.

Finally, investing in BCE is a long-term play. Buying this undervalued dividend stock now can provide years of income growth until that recovery does happen.

The recovery is coming â may as well earn some income until then

One of the core reasons why investors continue to look at BCE as a solid option to invest in is for the telecomâs juicy dividend. Also, BCE has been paying out dividends for well over a century and has provided annual upticks to its dividend for 16 consecutive years.

That includes a respectable 3.1% increase in 2024.

As of the time of writing, BCEâs quarterly dividend carries an insane yield of 8.7%, making it one of the better-paying options on the market. It also means that investors who drop $45,000 into BCE can earn an income of just over $3,900.

Even better, investors who arenât ready to draw on that income can reinvest it until needed, allowing any eventual income to grow further.

Prospective investors should note that BCEâs massive yield is primarily attributed to the stockâs decline over the past two years.

Final thoughts on this undervalued dividend stock

BCE, like all investments, is not without risk. In fact, BCEâs dip over the past year showcases the exact need for diversification in your portfolio.

What prospective investors need to know is that BCE is an undervalued dividend stock that still holds long-term appeal. As interest rates come down, so too will the underlying risk associated with BCE.

In my opinion, at its current discount, BCE is an undervalued dividend stock that would be a worthy contributor to any well-diversified portfolio.

The post This Undervalued Dividend Stock is Worth Buying Right Now appeared first on The Motley Fool Canada.