While telephone companies are noted for being dividend paying
stocks, surges in share prices are not expected. Telefonica Brazil
(
VIV
,
quote
) has a dividend income of 3.85% and over the last month of market
action,
Telefonica Brazil is up 8.10%
.
[caption id="attachment_67778" align="alignright" width="300"
caption="Aerial view of Telefónica's global headquarters in Las
Tablas, Madrid."]
[/caption]
Telefonica Brazil is a wireless communications company based in
San Paulo that offers a variety of fixed line and wireless
services. It has more than 11 million fixed line customers, 3
million broadband customers and half a million pay television
clients. With the World Cup coming to Brazil in 2014 and the Summer
Olympics in 2016,
infrastructure spending will increase greatly in
the country
. This will benefit Telefonica Brazil.
In addition to its soaring share price, the stock has other
bullish financial indicators. It has a strong profit margin of
15.05%. AT&T (
T
,
quote
) by contrast, has a profit margin of just 3.44%.
Earnings-per-share growth is up by 8.84% this year for Telefonica
Brazil. The price-to-earnings ratio is only 8.71.
While the average return-on-equity (ROE) is around 15% for a
publicly traded stock, Telefonica Brazil has an ROE of 21.61%. Its
debt load is much less burdensome than AT&T's. The payout ratio
for its dividend income stream is much smaller than AT&T's,
meaning there is more room for dividend growth and stock repurchase
plans in the future. This is critical for investors looking for
dividend paying stocks.
Now trading around $25.60, the mean analyst target price for
Telefonica Brazil over the next year is $29.24. Even with the
recent climb in the share price, it is only trading at 11.64% above
its 52-week low. Year to date, Telefoncia Brazil is off by
3.21%.
This is a very stable stock. With a beta of 0.56, Telefonica
Brazil is almost half as volatile as the stock market as a whole.
Research has proven stocks like these to have the highest return
over the long term. Telephone company investments are always
excellent ways to gain exposure to an emerging market nation in a
prudent manner, particularly as dividend paying stocks. The puny
short float of just 0.39% shows that there are very few who expect
the share price of Telefonica Brazil to fall, even with the recent
spike.
