LONDON — There are things to love and loathe about most companies. Today, I’m going to tell you about three things to love about BT Group plc (ADR) (NYSE:BT).
I’ll also be asking whether these positive factors make this FTSE 100 (INDEXFTSE:UKX) telecommunications company a good investment today.
Hanging on the telephone
Ian Livingston was appointed chief executive of BT Group plc (ADR) (NYSE:BT) part way through the company’s financial year ending March 2009. BT’s operating margin plummeted to 5.4% that year and the group made a bottom-line loss.
Since then, though, Livingston has rebuilt margins impressively: 10.4% (2010), 13.1% (2011), 14.5% (2012), and 16.6% (2013). Profits and earnings per share have been growing nicely and there appears to be good momentum in the business.
Don’t look back in anger
BT Group plc (ADR) (NYSE:BT) has cut its dividend twice since the turn of the millennium; not the kind of track record investors like to see. However, driving a car by looking only in the rearview mirror isn’t the wisest idea, and, similarly, focusing solely on a company’s potholed dividend past may prevent us from seeing what might be a smoother income road ahead.
At the start of its 2012/13 financial year, BT Group plc (ADR) (NYSE:BT) told shareholders: “We intend to increase the dividend per share by 10%-15% per year for the next three years.” BT released solid annual results earlier this month. The board lifted the dividend 14% and reiterated its intention to deliver 10%-15% annual increases through to 2014/15. There aren’t too many companies around with the confidence to make such a generous dividend commitment.
Football’s coming home
Competition is good for consumers. As an armchair consumer of Premier League football, I’m delighted to see Sky’s stranglehold on “the beautiful game” being challenged by BT Group plc (ADR) (NYSE:BT), who will be offering 38 live Premier League games next season — and other sports — free to any BT broadband customer.
It’s good for sports consumers, but is it good for BT shareholders? Well, in a world where punters are increasingly favoring a phones, broadband, and TV package, it makes sense for BT to aggressively land-grab a share of this fertile territory where BSkyB and Virgin Media Inc. (NASDAQ:VMED) are also staking claims.
A good investment?
Newsflow from BT Group plc (ADR) (NYSE:BT) has been positive for some time now, and the shares — currently trading at 308 pence — have soared 50% over the last 12 months.
Despite the rise, though, BT is on a forecast multiple of 12 times earnings for the year to March 2014, which is below the rating of the wider market. Meanwhile, the prospective dividend yield of 3.5% is also attractive relative to the market, and comes with the added appeal of BT’s bountiful growth intentions for the shareholder payout.
The article 3 Things to Love About BT Group originally appeared on Fool.com is written by G. A.Chester.
G. A.Chester has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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