Telecom Plus PLC (LON:TEP) Is An Attractive Dividend Stock, Here’s Why?
There is a lot to be liked about Telecom Plus PLC (LSE:TEP) as an income stock, over the past 10 years it has returned an average of 4.00% per year. The stock currently pays out a dividend yield of 4.17%, and has a market cap of £906.35M. Let’s dig deeper into whether Telecom Plus should have a place in your portfolio. View our latest analysis for Telecom Plus
Here’s how I find good dividend stocks
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
Is it paying an annual yield above 75% of dividend payers?
Does it consistently pay out dividends without missing a payment or significantly cutting payout?
Has dividend per share amount increased over the past?
Can it afford to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does Telecom Plus fit our criteria?
Telecom Plus has a trailing twelve-month payout ratio of 125.59%, which means that the dividend is not well-covered by its earnings. In the near future, analysts are predicting a more sensible payout ratio of 83.85%, leading to a dividend yield of 4.96%. In addition to this, EPS should increase to £0.47, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of TEP it has increased its DPS from £0.1 to £0.48 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Relative to peers, Telecom Plus produces a yield of 4.17%, which is on the low-side for Integrated Utilities stocks.
Next Steps:
Taking into account the dividend metrics, Telecom Plus ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three relevant aspects you should further examine:
1. Future Outlook: What are well-informed industry analysts predicting for TEP’s future growth? Take a look at our free research report of analyst consensus for TEP’s outlook.
2. Valuation: What is TEP worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether TEP is currently mispriced by the market.
3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
