Shares of Telephone and Data Systems Inc (NYSE:TDS) will begin trading ex-dividend in 5 days. To qualify for the dividend check of $0.16 per share, investors must have owned the shares prior to 14 June 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments.
Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine Telephone and Data Systems’s latest financial data to analyse its dividend characteristics.
Check out our latest analysis for Telephone and Data Systems
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has it increased its dividend per share amount over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
How well does Telephone and Data Systems fit our criteria?
Telephone and Data Systems has a trailing twelve-month payout ratio of 44.86%,
which means that the dividend is covered by earnings.
In the near future, analysts are predicting a payout ratio of 41.57%, leading to a
dividend yield of around 2.37%.
EPS is forecasted to fall to $0.77 in the upcoming year.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout.
In the case of TDS it has increased its DPS from $0.38 to $0.64 in the past 10 years.
It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels.
These are all positive signs of a great, reliable dividend stock.
Compared to its peers,
Telephone and Data Systems produces a
yield of 2.42%,
which is on the low-side for Wireless Telecom stocks.
With this in mind, I definitely rank Telephone and Data Systems as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio.
Given that this is purely a dividend analysis,
I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment.
I’ve put together
- Future Outlook: What are well-informed industry analysts predicting for TDS’s future growth? Take a look at our free research report of analyst consensus for TDS’s outlook.
- Valuation: What is TDS worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether TDS is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
TOP undervalued stocks for 2017
Looking for undervalued stocks? The trick is not to follow the herd. These overlooked companies are now trading for less than their intrinsic value. Click here to see them for FREE on the Simply Wall St platform.