Assessing the Sustainability and Growth of Telenor ASA's Dividends
Telenor ASA (TELNY, Financial) recently announced a dividend of $0.41 per share, payable on 2023-11-07, with the ex-dividend date set for 2023-10-19. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Telenor ASA's dividend performance and assess its sustainability.
About Telenor ASA
Telenor ASA is an international provider of telecom, data, and media communication services. Predominantly operating in Norway, the Norwegian government holds an almost 54% stake in the firm. Telenor also operates in other Nordic countries and is an established player in faster-growing emerging markets. Telenor owns both fixed-line and mobile networks, though fixed-line services (telephony, internet, TV, data services) provide around 10% of service revenue. The firm's fixed-line operations are in Sweden, Norway, Finland, and Denmark. In the rest of its markets, Telenor offers only mobile services.
Telenor ASA's Dividend History
Since 2010, Telenor ASA has maintained a consistent dividend payment record, distributing dividends on a bi-annual basis. The annual Dividends Per Share chart below depicts this historical trend.
Telenor ASA's Dividend Yield and Growth
As of today, Telenor ASA currently has a 12-month trailing dividend yield of 7.79% and a 12-month forward dividend yield of 7.83%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Telenor ASA's annual dividend growth rate was 3.50%. Extended to a five-year horizon, this rate increased to 3.60% per year. Over the past decade, Telenor ASA's annual dividends per share growth rate stands at 5.40%. Based on Telenor ASA's dividend yield and five-year growth rate, the 5-year yield on cost of Telenor ASA stock as of today is approximately 9.30%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
The sustainability of Telenor ASA's dividend can be evaluated using the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Telenor ASA's dividend payout ratio is 2.30, which may suggest that the company's dividend may not be sustainable. Telenor ASA's profitability rank is 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
Telenor ASA's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Telenor ASA's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. However, the company's revenue has increased by approximately -3.60% per year on average, underperforming approximately 76.53% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Telenor ASA's earnings increased by approximately 9.90% per year on average, a rate that underperforms approximately 43.19% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 0.10% underperforms approximately 63.16% of global competitors.
Conclusion
Telenor ASA's consistent dividend payment history and its expected increase in dividend payments over the next 12 months are encouraging. However, its high payout ratio and underperformance in revenue and earnings growth compared to global competitors raise concerns about the sustainability of its dividend payments. Therefore, while Telenor ASA's dividends may be attractive to investors seeking immediate returns, those looking for long-term dividend growth should consider these factors carefully.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
