13 Of 29 Communication Services WallStars Claim 'Safer' Dividends For May

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Includes: BCE, CHA, CHL, CMCSA, MBT, NTTYY, ORAN, RCI, TEO, VIV, VOD, VZ
by: Fredrik Arnold

Summary

Ten 'safer' dividend Communication Services (CS) WallStars averaged 37.9% gains . Top gainer Telecom Argentina produced a 52.23% net per broker targets 5/25/18.

13 of 29 top yield CS WallStars were tagged "safer" because they showed positive annual-returns, and free cash-flow yields greater than their dividend yields.

Top 10 "safer" dividend CS WallStar annual yields ranged 3.08% to 10.18% from CHA; RCI; VZ; ORAN; BCE; VIV; VOD; CHL; MBT; TEO. Their free cash flow yields ranged 5.1%-22.76%.

'Safer' dividend CS WallStars also reported payout-ratios (lower is better), total annual-returns, dividend-growth, and p/e ratios as of 5/25/18 to verify cash reserves. The 29 list was narrowed to 23 by disqualifying stocks showing negative annual returns.

Analyst one-year targets revealed that $5k invested in the lowest priced five of ten top 'safer' dividend CS WallStars projected 17.83% more gain than that from $5K invested in all ten. The low price little stocks are back in charge here.

Actionable Conclusions (1-10): Analysts Estimate Top Ten Communications Services 'Safer' Dividend WallStars To Net 20.35% to 52.23% Net Gains By May, 2019

Eight of ten top-yield "safer" dividend communication services dogs (tinted gray in the chart above) were among the top ten gainers for the coming year based on analyst 1 year target prices as of 5/25/18. Thus, the yield strategy for this group, as graded by analyst estimates for this month, proved 80% accurate.

Projections based on estimated dividend returns from $1000 invested in the thirty highest yielding stocks and their aggregate one year analyst median target prices, as reported by YCharts, created the 2018-19 data points. Note: one year target prices by a lone analyst was once applied. Ten probable profit-generating trades projected to May, 2019 were:

Telecom Argentina (TEO) netted $522.36 based on median target estimates from 10 analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 13% more than the market as a whole.

China Mobile (CHL) netted $499.45 based on median target price estimates from three analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 47% less than the market as a whole.

BCE. Inc. (BCE) netted $449.12 based on median target estimates from 22 analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 74% less than the market as a whole.

Comcast (CMCSA) netted $421.26 based on median target estimates from 25 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 20% more than the market as a whole.

Vodafone Group (VOD) netted $397.73 based on median target estimates from 3 analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 19% less than the market as a whole.

Orange (ORAN) netted $391.64 based on median target price estimates from two analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 34% less than the market as a whole.

Mobile Telesystems (MBT) was projected to net $312.54 based on median target estimates from 16 analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 6% more than the market as a whole.

Telefonica Brasil (VIV) netted $290.37, based on median target estimates from 12 analysts, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 42% more than the market as a whole.

Nippon Telegraph (OTCPK:NTTYY) netted $244.79 based on based on a target estimate from 1 analyst, plus dividends less broker fees. The Beta number showed this estimate subject to volatility 2% opposite the market as a whole.

China Telecom Corp (CHA) netted $203.54 based on median target estimates from 3 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to volatility 26% less than the market as a whole.

Average net gain in dividend and price was 37.33% on $10k invested as $1k in each of these ten “safer” dividend Communication Services WallStars. This gain estimate was subject to average volatility 22% less than the market as a whole.

The Dividend Dogs Rule

The "dog" moniker was earned by stocks exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. Thus, the highest yielding stocks in any collection became known as "dogs." More specifically, these are, in fact, best called, "underdogs."

May's "Safer" Dividend Communication Services WallStars

Yield (dividend / price) results from here May 25 supplemented by 1 year total returns (Annual) verified by YCharts for thirteen of twenty nine stocks from the Communication Services sector revealed the actionable conclusions discussed here.

13 "Safer" Dividend Communication Services WallStars

The Communication Services sector includes just two industry groups. Telecom Services is huge, and Pay TV is tiny. One of the stocks of the 29 selected by returns and/or yield for this writing was PayTV.

Communication Services WallStars With "Safer" Dividends


Periodic Safety Inspection

A previous article discussed the attributes of the 29 Top yield Communication Services stocks on this master list. Below is the list of 13 resulting from the "safety" check noting positive annual returns and free annual cash flow yield sufficient to cover their estimated annual dividend yield.

Corporate financial priorities, however, are easily manipulated by any board of directors choosing to promote company policies canceling or varying the payout of dividends to shareholders. Another favorite ploy enjoyed by corporate strategists is the "variable" dividend whereby the dividend floats with corporate cashflow and is thus unpredictable. This article contends that adequate cash flow is strong justification for a company to sustain annual dividend increases.

Four additional columns of financial data, listed after the Safety Margin figures above, reveal payout ratios (lower is better), total annual returns, dividend growth, and p/e ratio levels for each stock. This data is provided to show additional methods to reach beyond yield to select reliable payout stocks. Positive results in all five columns after the dividend ratio is a remarkable financial accomplishment.

To quantify top stock rankings, analyst mean price target estimates provided a "market sentiment" gauge of upside potential. Complementing the simple high yield metric, analyst median target price estimates became another tool to dig out bargains.

Yield Metrics Uncovered Positive Returns From Lowest Priced "Safer" Communication Services WallStars

Ten "Safer" Communication Services firms with the biggest yields May 25, per YCharts data, ranked themselves by yield as follows:

Actionable Conclusions: Analysts Projected 5 Lowest Priced, of Ten "Safer" High Yield Communication Services WallStars, To (11) Deliver 38.29% VS. (12) 32.5% Net Gains from All Ten by May, 2019

$5000 invested as $1k in each of the five lowest priced stocks in the "safer" ten communications service pack by yield were determined by analyst 1 year targets to deliver 17.83% more net gain than $5,000 invested as $.5k in all ten. The fourth lowest priced "safer" communication services stock, Telecom Argentina (NYSE:TEO) showed the best net gain of 52.24% per analyst targets.

Lowest priced five "safer" dividend communication services stocks as of May 25 were: Mobile Telesystems (MBT); Telefonica Brasil (VIV); Orange (ORAN); Telecom Argentina (TEO); Vodafone Group (VOD), with prices ranging from $9.97 to $26.16.

Higher priced five "Safer" Dividend Communication Services stocks as of April 11 were: BCE, Inc. (BCE); China Mobile (CHL); China Telecom Corp (CHA); Rogers Communications (RCI); Verizon Communications (VZ), with prices ranging from $42.10 to $48.52.

This distinction between five low priced dividend WallStars and the general field of ten reflects the "basic method" Michael B. O'Higgins employed for beating the Dow. The added scale of projected gains based on analyst targets contributed a unique element of "market sentiment" gauging upside potential. It provided a here and now equivalent of waiting a year to find out what might happen in the market. Its also the work analysts got paid big bucks to do.

Caution is advised, however, as analysts are historically 20% to 80% accurate on the direction of change and about 0% to 20% accurate on the degree of the change.

The net gain estimates mentioned above did not factor-in any foreign or domestic tax problems resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.

See my instablog for specific instructions about how to best apply the dividend dog data featured in this article, this glossary instablog to interpret my abbreviated headings, and this instablog to aid your safe investing. --Fredrik Arnold

Stocks listed above were suggested only as possible starting points for your "safer" dividend "Safer" Dividend Communication Services WallStar stock research process. These were not recommendations.

Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security. Prices and returns on equities in this article except as noted are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.

Graphs and charts were compiled by Rydlun & Co., LLC from data derived from www.ycharts. com; www.finance.yahoo.com; analyst mean target price by Thomson/First Call in Yahoo Finance. Dog photo from: pawsitivitygrooming.com

Disclosure: I am/we are long T.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.