'Safer' Dividend Comm Service WallStars Shine For November

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Includes: AMX, BCE, CHA, CHL, CMCSA, DCMYY, KT, MBT, SKM, TEO, TKC, TSU, VEON, VOD
by: Fredrik Arnold
Summary

WallStars show positive broker target price upsides. Ten 'safer' dividend Communication Services (CS) WallStars averaged 39.25% gains. Top gainer Telecom Argentina produced a 95.63% net per broker targets 11/13/18.

17 of 32 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 WallStars' annual yields ranged 3.23% to 10.28% from KT, SKM, DCMYY, CHL, TKC, TEO, BCE, VOD, MBT, and VEON. Their free cash flow yields ranged 5.84-17.84%.

'Safer' dividend CS high-yield WallStars also reported payout ratios (lower is better), total annual returns, dividend growth, and P/E ratios as of 11/13/18 to validate cash reserves. The 32 list was narrowed to 26 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 27.56% more gain than that from $5K invested in all ten. The low price little dogs are in charge of the WallStar 'safer' dividend kennel.

Actionable Conclusions (1-10): Analysts Estimate Top Ten Communications Services 'Safer' Dividend WallStars To Net 20% to 95.63% Gains By November 2019

Seven of ten top-yield 'safer' dividend communication services equities (tinted gray in the chart above) were among the top ten gainers for the coming year based on analyst one-year target prices as of 11/13/18. Thus, the yield strategy for this group, as graded by analyst estimates for this month, proved 70% accurate.

Projections based on estimated dividend returns from $1,000 invested in the thirty-one highest yielding stocks and their aggregate one-year analyst median target prices, as reported by YCharts, created the 2018-2019 data points. One-year target prices by lone analysts were not applied. Ten probable profit-generating trades projected to November 2019 were:

Telecom Argentina (TEO) netted $956.27 based on median target estimates from ten analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 2% less than the market as a whole.

Vodafone Group (VOD) netted $513.26 based on median target estimates from three analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 11% less than the market as a whole.

VEON Ltd. (VEON) netted $501.28 based on a target estimate from fifteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 110% more than the market as a whole.

Mobile TeleSystems (MBT) was projected to net $412.87 based on median target estimates from seventeen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 10% more than the market as a whole.

China Mobile (CHL) netted $363.56 based on median target price estimates from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 35% less than the market as a whole.

TIM Participacoes (TSU) netted $283.17 based on median target price estimates from thirteen analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility equal to the market as a whole.

Turkcell Iletisim Hizmetleri AS (TKC) netted $257.29 based on median target estimates from four analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 59% less than the market as a whole.

BCE Inc. (BCE) netted $224.41 based on median target estimates from 21 analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 68% less than the market as a whole.

China Telecom Corp. (CHA) netted $212.84 based on median target estimates from three analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 21% less than the market as a whole.

America Movil (AMX) netted $200.04 based on median target estimates from 18 analysts plus dividends less broker fees. The Beta number showed this estimate subject to volatility 45% less than the market as a whole.

Average net gain in dividend and price was 39.25% on $10k invested as $1k in each of these ten 'safer' dividend Communication Services WallStars. This gain estimate was subject to average volatility of 12% 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."

November's 'Safer' Dividend Communication Services WallStars

Yield (dividend/price) results from here November 13 supplemented by one-year total returns (annual) verified by YCharts for seventeen of thirty-two stocks from the Communication Services sector revealed the actionable conclusions discussed here.

The Communication Services sector includes just two industry groups. Telecom Services is huge and Pay TV is tiny. Just one of the stocks of the 17 'safer' selected WallStars for this writing was Pay TV.

Communication Services High Yield WallStars With 'Safer' Dividends

Periodic Safety Inspection

A previous article discussed the attributes of the 32 top Communication Services WallStars. Selected by yield and gains from this master list are 17 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 cash flow 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 are a remarkable financial accomplishment.

To quantify top stock rankings, analyst median 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 Solid Positive Returns From Lowest Priced 'Safer' Communication Services High Yield WallStars

Ten 'safer' Communication Services firms with the biggest yields November 13, 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 45.61% Vs. (12) 35.75% Net Gains from All Ten by November 2019

$5,000 invested as $1k in each of the five lowest-priced stocks in the 'safer' ten Communications Services WallStars by yield were determined by analyst one-year targets to deliver 27.56% more net gain than $5,000 invested as $.5k in all ten. The fifth lowest priced 'safer' Communication Services WallStar, Telecom Argentina showed the best net gain of 95.63% per analyst targets.

Lowest priced five 'safer' dividend Communication Services stocks as of November 13 were: VEON Ltd, Turkcell Iletisim Hizmetleri AS, Mobile TeleSystems, KT Corp. (KT), and Telecom Argentina with prices ranging from $2.82 to $16.92.

Higher priced five 'safer' dividend Communication Services stocks as of November 13 were: Vodafone Group, NTT DOCOMO Inc (OTCPK:DCMYY), SK Telecom Co Ltd. (SKM), BCE Inc., and China Mobile Ltd. with prices ranging from $20.08 to $47.61.

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. It is 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 Communication Services high yield 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: indiatvnews.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.