No list of French dividend stocks would be complete without mentioning France Telecom (NYSE:FTE).
I’ve been a fan of European telecom for a long time now, and I hold shares of Telefonica (NYSE:TEF) and Vodafone (NYSE:VOD) in client accounts. I consider both to be excellent long-term plays on rising incomes in the emerging markets in which both operate.
France Telecom is less globally diversified than these two peers, but the company is hardly provincial. It is a major competitor in the fast-growing markets of Africa and the Middle East.
Plus, European telecom firms have been some of the highest-yielding companies in the world for the past few years, and France Telecom is no exception. The company trades for just 7 times earnings and yields 12.5%.
With a yield this high, it is legitimate to ask: Is the dividend sustainable? With credit conditions in Europe easing due to Mario Draghi’s “doing whatever it takes,” I believe France Telecom can sustain its dividend. But given that its payout ratio is nearly 90%, I wouldn’t expect too much in the way of dividend growth.