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This article will examine five dividend paying European Telecom companies, with the goal of determining which ones could be good buys for your portfolio.

France Telecom S.A. (FTE) FTE has a market cap of $47.84 billion with a price to earnings ratio of 11.37. The stock has traded in a 52 week range between $15.16 and $24.60. The stock is currently trading around $18. The company reported 2010 revenues of $60 billion compared to revenues of $62.5 billion in 2009. Year 2010 net income was $5.17 billion compared to net income of $4.21 billion in 2009.

One of FTE’s competitors is Bouygues S.A. (OTCPK:BOUYY) a privately held corporation that had revenues of $41 billion in 2010.

FTE is a company that should be of interest to investors that are looking to purchase stock that provides consistent dividend income. The company has been paying dividends since 1998 and has been making bi-annual dividend payments since 2008. In 2011 dividends were paid in June and August. The total paid was $2.02 which would make the yield about 8.9%. FTE’s stock price has gone down by 19.8% over the last 52 weeks. One reason that the stock price has suffered is because of the financial turmoil in Europe, for which there is no end in sight. The company has almost $7 billion in cash and increased its 2011 dividend by 12%. I believe that the company will be able to continue making strong dividend payments. However a high dividend does no good if your capital losses exceed the dividend income. I rate FTE as a hold.

Portugal Telecom SGPS S.A. (NYSE:PT) PT has a market cap of $6.42 billion with a price to earnings ratio of 0.85%. The stock has traded in a 52 week range of between $6.76 and $15.24. The stock is currently trading at the bottom of its 52 week trading range at around $7. The company reported second quarter revenues of $2.54 billion compared to revenues of $1.16 billion in the second quarter of 2010. Second quarter net income was $143 million compared to net income of $207 million in the second quarter of 2010.

One of PT’s competitors is America Movil S.A.B. (NYSE:AMX). AMX is currently trading around $23 with a $91.97 billion market cap and a 15.83 price to earnings ratio. AMX pays a dividend which yields 1.3% versus PT whose dividend yields 12.9%.

PT is a well established company that has been profitable in each of the last ten years. However in recent quarters the company has seen its earnings growth slow. The company has paid dividends since 1996, but the payment schedule and dividend amounts vary. The company made a single dividend payment in each year since 2008 and in May of 2011 it paid a dividend of $1.86 which was a 141% increase over 2010. This stock along with other European telecoms has suffered and is down by 47.32% over the last 52 weeks. The company has $4.78 billion cash on hand but has a debt to equity ratio of over 300%. I question whether the company can continue to pay such a high dividend when it is carrying so much debt. In spite of the high dividend yield, I would not recommend this stock until the stock price begins to improve. I rate PT as a hold.

Telecom Italia S.P.A. (NYSE:TI) TI has a market cap of $23.42 billion with a negative price to earnings ratio. The stock has been trading in a 52 week range between $9.74 and $16.04. The stock is currently trading around $12. The company reported 2010 revenues of $36.39 billion compared to revenues of $37.51 billion in 2009. Year 2010 net income was $4.12 billion compared to net income of $2.20 billion in 2009.

One of TI’s competitors is Hutchinson Whampoa Ltd. (OTCPK:HUWHY). HUWHY.PK is currently trading around $17 with a market cap of $38.01 billion and a price to earnings ratio of 4.94. HUWHY.PK does not pay a dividend while TI pays a dividend with a 5.3% yields.

TI has made a profit in each of the last eight years and in 2010 increased its net income by 87%. The company did however realize a 27% decrease in net income in the second quarter. The company has made a single dividend payment in each year since 2004 and in May of 2011 paid a dividend of $0.81. This European telecom company has seen its stock price slip by 15.89% over the last 52 weeks. On October 11th, Goldman Sachs reduced the stocks rating from neutral to sell. Goldman’s cited the impaired global outlook and recent downgrades by debt rating agencies Moody and Fitch, as the reason for the downgrade. The company has $6.91 billion in cash but $131.14 billion in debt. This company is in a downward trend, and I cannot recommend this stock at this time. I rate TI as a hold.

Telefonica S.A. (NYSE:TEF) TEF has a market cap of $93.76 billion with a price to earnings ratio of 7.15. The stock has traded in a 52 week range between $17.31 and $27.61. The stock is currently trading around $21. The company reported second quarter revenues of $22.5 billion compared to revenues of $19 billion in the second quarter of 2010. Second quarter net income was $2.24 billion compared to net income of $2.67 billion in the second quarter of 2010.

One of TEF’s competitors is the BT Group PLC (NYSE:BT). BT is currently trading around $28 with a market cap of $84 billion and a price to earnings ratio of 9.24. BT pays a dividend which yields 5.5% versus TEF whose dividend yields 8.4%.

TEF is a Spanish based telecom company that has been profitable in nine out of the last ten years. The company’s 2010 net income increased by 23%. The company has paid dividends since 1998 and has been making bi-annual dividend payments since 2006. Since 2006, the company has increased each dividend payment, and over that period of time, dividends have increased by 251%. The May dividend was $1.08, and the November dividend has not yet been announced. I suspect that the November dividend will be slightly than in May. TEF has seen its stock price drop buy 21.77% over the last 52 weeks. TEF is a strong company but due to the adverse business climate for European Telecom companies, I would not recommend the stock at this time. I rate TEF as a hold.

Vodafone Group Plc (NASDAQ:VOD) VOD has a market cap of $140.96 million with a price to earnings ratio of 11.58. The stock has traded in a 52 week range between $24.31 and $32.54. The stock is currently trading around $27. The company reported fiscal year 2011 revenues for the period ending on March 31st in the amount of $71.51 billion, compared to revenues of $71.12 billion for the 2010 fiscal year. Fiscal year 2011 net income was $12.41 billion compared to net income of $13.82 billion for the 2010 fiscal year.

One of Vodafone’s competitors is Deutsche Telecom AG (OTCQX:DTEGY). DTEGY.PK is currently trading around $13 with has a market cap of $56.33 billion and a price to earnings ratio of 32.54. DTEGY.PK does not pay a dividend versus VOD whose dividend yields 7.1%.

VOD is an international mobile communication company that is based in the United Kingdom. The company has been profitable in each of the last four years. VOD has paid dividends since 1989 and has been making bi-annual dividend payments since 2007. The company has increased its dividend in each of the last ten years. VOD is a 45% owner of Verizon Wireless (NYSE:VZ) and will receive a one-time dividend of $4.5 billion from VZ on January 31, 2012. The company will distribute approximately $2 billion of that dividend to shareholders, in February of 2012, and will give details about the distribution on November 8th. Vodafone’s stock has not been hammered like other telecom stocks and is up by 3.13% over the last52 weeks. On September 26th CNBC stock analyst Jim Cramer talked about VOD and said "That is exactly the stock I want to buy. It has a good yield. It has a strong business." I agree with Jim Cramer, and I rate VOD as a buy.

Source: 5 European Telecom Stocks With Monster Dividends