A Closer Look at BT Group plc (ADR) (BT)’s Dividend Potential

How do BT Group’s dividend prospects rate against the competition?

Prospective Dividend Yield Prospective P/E Ratio
Fixed-line telecommunications 3.2% 15.6
FTSE 100 3.2% 15.8

Source: Digital Look.

BT Group plc (ADR) (NYSE:BT) currently changes hands on a P/E rating of 12.1 for 2014, less than the corresponding earnings multiples of both its sector peers and the broader FTSE 100, while still offering a better projected dividend yield. Another useful comparison to make is against Sky, which offers a slightly higher forward yield of 3.6% for this year but which trades on a P/E readout of 14.3.

I believe that BT Group plc (ADR) (NYSE:BT)’s investment over the past year to improve its appeal as a triple services provider should deliver solid earnings growth in coming years and thus improving shareholder payouts. The firm’s sizable pension deficit continues to worry investors, but I believe that the balance sheet remains in very decent shape, particularly when compared with many of its sector counterparts.

The company boasts the financial clout to take on Sky at its own game, and has significantly boosted investment in its television division to boost earnings, as well as ramped up superfast fibre installation at its broadband business. And BT Group plc (ADR) (NYSE:BT)’s announcement last week that it intends to make 300 million pounds’ worth of share repurchases both this year and next seals the stock’s position as an appetizing income stock, in my opinion.

The article A Closer Look at BT Group’s Dividend Potential originally appeared on Fool.com.

Fool contributor Royston Wild has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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