VimpelCom Ltd (ADR) (VIP), France Telecom SA (ADR) (FTE), Partner Communications Company Ltd (ADR) (PTNR): Three Dividend Plays You Can’t Miss

Israeli Play

The Israel based Partner Communications Company Ltd (ADR) (NASDAQ:PTNR) offers fixed line and cellular service to a local clientele. The company is the largest telecom provider in Israel and holds a market share of more than 90%. This dominance ensures a steady stream of cash flows from services. The company has suffered from declining growth in the telecom sector and the 5-year average revenue growth is approximately 1.5%.

The company offers an excellent dividend yield of 12.7% and boasts a 5-average dividend yield of 8.8%. Partner Communications Company Ltd (ADR) (NASDAQ:PTNR) generates approximately $0.5 billion in annual operating cash flows which comes down to an OCF yield of 50%. The high OCF yield shows that not only are the current dividends sustainable but there is substantial room for growth as well.

Despite the revenue declines, the high OCF yield ensures the safety of company’s dividends. Partner Communications Company Ltd (ADR) (NASDAQ:PTNR) also offers a significant capital upside because it is trading at a mammoth discount to mean sell side target price of $26. Cheap valuations and a sustainable high dividend make Partner Communications Company Ltd (ADR) (NASDAQ:PTNR) an excellent dividend play.

Conclusion

The S&P 500 index has seen a huge rally since the start of this year. One of the primary reasons behind this rally has been the unattractiveness of debt markets. In this market, dividends are an attractive alternative for fixed income investors. The three companies above are trading at pretty cheap valuations and also offer extremely high dividend yields. Investors should consider them for dividend play but only after thorough due diligence.

The article 3 Dividend Plays You Can’t Miss originally appeared on Fool.com and is written by Mohsin Saeed.

Mohsin Saeed has no position in any stocks mentioned. The Motley Fool recommends France Telecom (ADR). The Motley Fool owns shares of France Telecom (ADR). Mohsin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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