Deutsche Telekom AG will raise its dividend from last year’s same-period payment to €0.77 on April 15th, which brings the annual payment to 3.5 per cent of the current stock price, a typical figure for the industry, Bloomberg reported on Sunday.
Prior to this announcement, the company’s dividend was well supported by both cash flow and earnings, suggesting a significant portion of earnings is reinvested into the business; however, dividend yields only impress if they can be maintained over time.
Earnings per share (EPS) is predicted to grow by 5.2 per cent in the next year. If the dividend follows recent trends, Bloomberg expects the payout ratio to reach 62 per cent by next year, a sustainable level.
Investors in Deutsche Telekom have enjoyed a consistent dividend income. The company has shown impressive EPS growth of 21 per cent annually over the past five years. With rapid EPS growth and a balanced approach to reinvestment and dividend payouts, Deutsche Telekom could emerge as a robust dividend payer.
Deutsche Telekom is viewed as a strong income stock due to its track record, growing earnings, and dividend increase. The company’s earnings comfortably cover distributions, and it generates substantial cash. These factors suggest it has strong potential as a dividend stock.
A consistent dividend policy boosts investor confidence more than an inconsistent one. However, dividends aren’t the only factor to consider when evaluating a company.
