A comprehensive analysis of Tele2 AB's dividend yield, growth, and future prospects
Tele2 AB (TLTZY, Financial) recently announced a dividend of $0.15 per share, payable on 2023-10-30, with the ex-dividend date set for 2023-10-06. As investors anticipate this upcoming payment, it's crucial to examine the company's dividend history, yield, and growth rates. Utilizing data from GuruFocus, let's delve into Tele2 AB's dividend performance and evaluate its sustainability.
Introduction to Tele2 AB
Tele2 is the second-largest telecom operator by market share in Sweden, trailing only Telia. Until 2018, Tele2 was a purely mobile operator, but it expanded its portfolio by acquiring Com Hem, Sweden's largest cable company. Tele2 also operates in the Baltic markets, where it runs a mobile-only business. Over the past decade, Tele2 has demonstrated strong cost discipline and a healthy dividend policy, which we expect to continue.
A Look at Tele2 AB's Dividend History
Tele2 AB has maintained a consistent dividend payment record since 2011, with dividends currently distributed bi-annually. The following chart shows annual Dividends Per Share for tracking historical trends.
Dissecting Tele2 AB's Dividend Yield and Growth
As of today, Tele2 AB has a 12-month trailing dividend yield of 8.14% and a 12-month forward dividend yield of 8.24%, indicating an expected increase in dividend payments over the next 12 months.
Over the past three years, Tele2 AB's annual dividend growth rate was 15.30%. This rate decreased to 8.10% per year over a five-year period. Over the past decade, Tele2 AB's annual dividends per share growth rate stands at 0.20%.
Based on Tele2 AB's dividend yield and five-year growth rate, the 5-year yield on cost of Tele2 AB stock as of today is approximately 12.02%.
Evaluating Dividend Sustainability: Payout Ratio and Profitability
To assess the sustainability of the dividend, one must evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Tele2 AB's dividend payout ratio is 1.30, which may suggest that the company's dividend may not be sustainable.
Tele2 AB's profitability rank of 7 out of 10 as of 2023-06-30, suggests good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Assessing Growth Metrics for Future Outlook
For a company to sustain dividends, robust growth metrics are essential. Tele2 AB's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Tele2 AB's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. However, the company's revenue has increased by approximately 0.90% per year on average, a rate that underperforms approximately 61.66% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Tele2 AB's earnings increased by approximately 28.70% per year on average, a rate that underperforms approximately 19.8% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 19.70% underperforms approximately 25.96% of global competitors.
Conclusion
Tele2 AB has shown a consistent dividend payment record with a promising yield. However, the high payout ratio and underperformance compared to global competitors in growth metrics may raise questions about the sustainability of its dividend in the long run. Investors should consider these factors when evaluating Tele2 AB's dividend prospects. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
