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

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Editor’s Note: France Telecom SA (ADR) (NYSE:FTE) cut their dividend, this article has been amended to reflect this.

France Telecom SA (ADR) (NYSE:FTE)

The Fed is trying to revive the economy by reducing rates and encouraging consumer spending. The effectiveness of this methodology is debatable but the reduction has definitely increased the demand for dividend stocks. High dividend yields are not common in the technology sector because companies are more concerned about R&D and growth. The telecom industry is an exception with its high dividend yields and earrings visibility. The following three companies have high yields and are reliable dividend investments.

French Play

France Telecom SA (ADR) (NYSE:FTE) is one of the world’s largest telecom operators. It provides data, multimedia, transmission, internet and mobile telecommunications services. The company operates under the France Telecom SA (ADR) (NYSE:FTE) and Orange brand names.

The company offers an extremely high dividend yield. France Telecom SA (ADR) (NYSE:FTE) generated around $17 billion from operations last year and has been continuously generating more than $15 billion for past five years.

The telecom industry has a high earnings visibility because consumers usually have long term plans. This makes it relatively harder to shift from one carrier to another, resulting in a consistent stream of cash flows.

The global telecom industry has been sluggish due to the global economic slowdown. France Telecom SA (ADR) (NYSE:FTE) is not different and the company has posted a couple of bad quarters. There is talk of some major M&A activity in the European and American telecom sector and this should revive the industry to some extent. Despite these troubles the OCF yield is high enough to easily pay for the current dividend yield.

The stock is trading at a P/E of 9x, which is almost half the industry average. It is also at a 30% discount to mean sell side target price of $14.30. At these valuations, it is not only a lucrative dividend play but also has a huge upside potential.

Dutch Play

provides voice and data services through traditional and mobile broadband. The company offers prepaid and contract plans to its mobile telecommunication customers. It also provides data, voice and internet services to a multitude of corporate clients.

The company has one of the most sound and efficient business model in the entire industry. In this tough economy, the company has managed to maintain an impressive revenue growth rate of 38% while the industry is shrinking by 3%.

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