Assessing the Upcoming Dividend and Historical Performance
Deutsche Telekom AG (DTEGY, Financial) recently announced a dividend of $0.84 per share, payable on 2024-04-22, with the ex-dividend date set for 2024-04-12. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Deutsche Telekom AG's dividend performance and assess its sustainability.
What Does Deutsche Telekom AG Do?
Deutsche Telekom is the incumbent telecom operator in Germany and remains the dominant player in both mobile and fixed markets. It also owns a controlling stake in T-Mobile US—one of three primary wireless carriers in the United States—which merged with Sprint in 2020, consolidating the market from four to three operators. Aside from its two core markets, Deutsche Telekom also has operations in several Central European countries and holds an IT arm (Systems Solutions).
A Glimpse at Deutsche Telekom AG's Dividend History
Deutsche Telekom AG has maintained a consistent dividend payment record since 2005, with dividends currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Deutsche Telekom AG's Dividend Yield and Growth
As of today, Deutsche Telekom AG currently has a 12-month trailing dividend yield of 3.16% and a 12-month forward dividend yield of 3.45%. This suggests an expectation of increased dividend payments over the next 12 months. Based on Deutsche Telekom AG's dividend yield and five-year growth rate, the 5-year yield on cost of Deutsche Telekom AG stock as of today is approximately 3.16%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to 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 2023-12-31, Deutsche Telekom AG's dividend payout ratio is 0.57. Deutsche Telekom AG's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Deutsche Telekom AG's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Deutsche Telekom AG's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Deutsche Telekom AG's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Deutsche Telekom AG's revenue has increased by approximately 2.10% per year on average, a rate that underperforms approximately 59.4% 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, Deutsche Telekom AG's earnings increased by approximately 10.10% per year on average, a rate that underperforms approximately 44.16% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 20.40%, which underperforms approximately 25.59% of global competitors.
Next Steps
When evaluating Deutsche Telekom AG's upcoming dividend payment, investors should consider the dividend growth rate, payout ratio, profitability, and growth metrics. The company's consistent history of dividend payments, a reasonable payout ratio, and strong profitability rank indicate a sustainable dividend policy. However, the mixed growth metrics suggest that while Deutsche Telekom AG has a solid foundation, its growth is moderate compared to industry peers. Investors would do well to monitor these factors alongside industry trends and regulatory changes that could impact the company's future performance. 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.
