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Telecom stocks yielding returns for investors

European telecommunication companies are expected to begin offering dividends as the sector stabilises. During the recession many companies shocked investors by ending dividend payments. With European telecom stocks now paying a 4 percent average dividend, Holly Cook, Morningstar's Managing Editor, highlights four penitential companies to watch:

Orange is the cheapest European telecommunications stock available and is currently trading well below Morningstar’s fair value estimate of EUR 14.00.

Vodafone has already begun to offer a dividend, but the dividend’s growth rate is predicted to be much lower than pre-recession levels. Morningstar estimates a 3 percent annual dividend growth rate. The company is also speculated to be considering the acquisition of Swisscom’s Italian broadband firm,

Fastweb.
Telefonica is undervalued according to Morningstar who has placed a fair value estimate on the company’s stock at EUR 14.00. Telefonica began offering a dividend this year, but it is not expected to increase the dividend rate anytime soon.

Telenor is the company on the list with the highest revenue growth rate and highest expected dividend growth rate.

02:05 minutes
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