The chief executive of BCE thinks his company is "an ironic dividend stock" that will actually benefit from a rise in interest rates.

“We’re kind of an ironic dividend stock, because as interest rates go up, people say dividend stocks aren’t as popular,” George Cope told BNN Bloomberg’s Amanda Lang in an interview Thursday on the sidelines of the Canadian Business Hall of Fame’s induction ceremony.

“But we actually generate more cash flow if interest rates go up, as a company, which is a very unusual situation because of the history of our pension and what we’ve done in this country.”

Higher rates, notably the 10-year U.S. Treasury yield’s run above three per cent, have dampened the allure of dividend stocks in the marketplace. Indeed, BCE shares have dropped 10 per cent year to date.

“Going forward, if interest rates move up another half a per cent, which is what I think everyone would generally be calling, then our pension moves to a surplus,” Cope added. “And so suddenly we’re not having to fund that. It adds more cash flow to our story.”  

The Bank of Canada has raised interest rates three times since July, with the last increase in January. The bank is widely expected to boost rates again this year.   

Cope also spoke about the benefits of owning a media division, which he says accounts for nine per cent of the company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) and has given BCE a “great strategic advantage.”

“Our media business is important strategically – it gets a lot of profile because it’s a media company,” he said. “So it’s really strategically important to driving our broadband business, our TV business. But in terms of its scale and size, I think it gets a disproportionate amount of attention given it is nine per cent of our size.”

Cope said when it comes to the company’s long-term growth trajectory, broadband Internet and broadband wireless will be the key drivers.

“That is the story,” he said. “So where does all of our capital go? 5G, LTE Advanced, fibre to the home. Both to business and the consumer.”

BNN Bloomberg is a division of Bell Media, which is owned by BCE.