It hasn’t been an easy time in telecom this year as some of the big names in the sector have underperformed.
AT&T stock ( T ) is down 20% year to date, while Verizon stock ( VZ ) is down 12%. But relatively speaking, T-Mobile ( TMUS ) has held up well, with shares flat since the start of the year.
And on Wednesday, T-Mobile announced that it will pay its first dividend to shareholders.
“We’re going through this entire sector in growth, and our capital priorities haven’t changed,” Sievert told Yahoo Finance Live (video above) at the Goldman Sachs Communacopia & Tech conference in San Francisco. “To support this historic ambitious business plan, organic and inorganic, core business and related issues.”
T-Mobile stock rose 4% Thursday afternoon following the earnings announcement.
“By 2021, we’ve set out a big and bold ambition to see equity returns of up to $60 billion over our plan horizon,” Sievert added. “That’s the second part: $19 billion over the next five quarters and, as part of that, our first dividend — a $3 billion annual dividend. That’s $3.75 billion over the next five quarters, an increase of about 10% year over year.”
Telecom giants AT&T and Verizon are known for healthy dividends. AT&T will pay about $8 billion, while Verizon will pay about $11 billion. Annual stock dividend.
Looking ahead, Sievert is looking to capitalize on this insight.
In the second quarter, T-Mobile’s postpaid net additions came in better than expected and fewer subscribers left the network, although total sales fell 2 percent year over year to $19.2 billion.
Sievert said investors can expect industry-leading revenue growth and cash flow generation.
“Investors expect from us sustainable, reliable growth, profitable growth that translates into industry-leading cash flow growth — and that’s what we’re delivering,” Sievert told Yahoo Finance Live. “We have been consistently delivering on our long-term ambitions around dividend payouts until we believe now is the time to do so.”
There is optimism, especially when it comes to T-Mobile from Wall Street. Currently, analysts’ recommendations on T-Mobile are around 31 buys, three holds and one sell.
“T-Mobile is a favorite stock across our coverage as we see strong EBITDA and cash flow growth, as well as a strong return on capital,” JPMorgan’s Philip Cusick wrote in July.
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