What are we looking for?
Sustainable dividends from companies ready to lead the 5G revolution.
Team Canada has used the Pyeongchang Olympic Games to showcase its athletic prowess. But Intel Corp. and KT Corp. – one of South Korea's biggest telecom providers – are using the games to showcase the power of 5G wireless technology. With speeds 10 times faster than the current LTE (long-term evolution, or 4G) networks, 5G will transform internet streaming and wireless communications. For now, that technology lets visitors to Olympic venues glimpse the future as tiny cameras on athletes stream footage in real time.
Widespread 5G deployment will take time and billions of dollars to unfold, but several North American companies have already emerged as leaders.
From an extensive list of telecom and tech leaders, we singled out dividend-payers on the leading edge of 5G. We then applied our TSI Dividend Sustainability Rating System, which awards points to a stock based on key factors:
One point for five years of continuous dividend payments – two points for more than five;
Two points if it has raised the payment in the past five years;
One point for management's commitment to dividends;
One point for operating in non-cyclical industries;
One point for limited exposure to foreign currency rates and freedom from political interference;
Two points for a strong balance sheet, including manageable debt and adequate cash;
Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments;
One point if the company is a leader in its industry.
Companies with 10 to 12 points have the most-secure dividends, or the highest sustainability. Those with seven to nine points have above-average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.
More about TSI Network
TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.
What we found
Our TSI Dividend Sustainability Rating System generated seven stocks. BCE Inc., Telus Corp., Verizon Communications Inc. and AT&T Inc. are already investing billions in fibre-optic networks to prepare for 5G. In fact, Verizon and AT&T are rolling out 5G in select U.S. cities by the end of 2018. Fibre-optic leader Corning Inc., networking giant Cisco Systems Inc. and dominant chip maker Intel are at the forefront of providing the technology to link up and control 5G traffic.
We advise investors to do additional research on any investments we identify here.
Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.
Select dividend-payers on the leading edge of 5G
|Ranking*||Company||Ticker||Div. Sustainability Rating||Points||Div. Yield %||Market cap ($ Bil.)**||Recent price $**||1Y Total Return %|
|5||Cisco Systems Inc.||CSCO-Q||Above Average||9||3.1||217.8||43.31||27.5|
|6||Intel Corp.||INTC-Q||Above Average||8||2.6||216.8||45.94||25.8|
|7||Corning Inc.||GLW-N||Above Average||8||2.5||25.4||29.26||6.9|
Source: Dividend Advisor
*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements. **Share price and market cap are in native currency.
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