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Three Dividend Yields That Are Ringing Off The Hook

Jul. 16, 2013 4:56 AM ET
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Telecom companies have long been staples of income-generating portfolios.

In fact, there probably aren't many dividend stock investors who haven't owned one or all of the "Baby Bells."

Most of the time, when we think of dividend-paying telecoms, we think of big U.S. names, like AT&T (T) and Verizon (VZ). But there are many non-U.S. telecoms that are doing well and also paying big, and sometimes bigger, dividends.

Let's take a look at a few companies that you just might want to dial in to your portfolio…

Dial "BCE" for Dividends

BCE, also known as Bell Canada (BCE), has been around for a long time - and so has its dividend.

As a matter of fact, it's been paying a dividend since the 1980s. And at a current yield of 5.37%, it's a very appealing one, too.

It's higher than Verizon's 4% and even bests AT&T's 5%.

Plus, by owning shares of BCE, you'll be diversifying your portfolio, too. You see, BCE is one of three dominant players in the Canadian market.

And it's more than just a phone company. It's also a major wireless provider, has the largest satellite television operation in the country, and it even owns content.

But BCE isn't so much a growth story as a pure dividend play. And because of its secure position in the Canadian market, it's unlikely to be challenged by new entrants anytime soon.

We can therefore expect those dividends to keep on coming.

But there are also great dividend and growth stories in other countries…

A Dividend Message From China

China Mobile (CHL) is another foreign telecom, and it has an appealing dividend yield of 4.33%.

That dividend has been on the rise with a five-year average dividend growth rate of 8.14%. Plus, the company has a very low dividend payout ratio of 42%, which means China Mobile can afford to keep paying, and increasing, its dividend.

But unlike BCE, China Mobile is a real growth story.

You see, China Mobile may already have two-thirds of the wireless market in China, but with its outstanding network coverage, strong brand and high customer loyalty, it should continue to fare well.

With so much of China's population still aspiring to the middle class, there are plenty of new customers to sign up for China Mobile's products and services.

And China Mobile is aggressively expanding its subscriber base in rural areas where there's a greater opportunity to find new subscribers. That should allow the company to continue to grow, as well.

Now let's head on over to the other side of the world…

A Global German Telecom

Finally, let's consider Deutsche Telecom (DTEGY).

This is a German company, but it operates in several international markets. As a matter of fact, more than 25% of its 2012 revenue was generated in the United States.

And it's a big company. Its fixed-line network has 32 million customers, while its internet service has 17.5 million subscribers. On top of that, Deutsche Telecom's wireless business serves 132.5 million subscribers.

Now, Deutsche Telecom doesn't have the dividend history of BCE, or even China Mobile, but with a 7.84% yield, it's worth considering.

Deutsche Telecom has been a reliable generator of free cash flow, which is necessary in order to keep paying dividends.

Plus, as a diversifier, it certainly fits well into many portfolios.

Frankly, all three of these companies do. So the next time you're evaluating your portfolio, include these three companies on your list of potential additions.

Safe Investing,

Steve Gunn

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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