European Dividend Stocks to Buy: Telenor ASA (TELNY)
Dividend Yield: 5.3%
Norwegian telecom operator Telenor (TELNY) has exactly what I like to see in “emerging markets lite” dividend stocks. It’s headquartered in a well-regulated European market, and it has a large-enough market presence in developed markets to provide a level of stability. Norway accounts for 24% of revenues, with other European markets (primarily Sweden and Denmark, though Telenor has significant operations in Hungary, Serbia. Montenegro and Bulgaria as well) making up another 24%.
But the real growth story comes from Telenor’s stake in emerging Asia, which makes up 45% of revenues. Telenor has a major presence in Thailand, Malaysia, Bangladesh, Pakistan, India and Myanmar.
India has been something of a regulatory minefield for telecom operators of late, though Narendra Modi, the frontrunner in India’s elections this month, has a reputation for being pro-business and anti-red tape. An election win by Modi should bode well for Telenor’s Indian operations, which while still very small (about 3% of revenues), account for much of Telenor’s recent subscriber growth. Telenor added 17 million new subscribers last year, with most of them coming from South Asia.
Telenor pays a respectable 5.3% dividend yield, but importantly, it grew its dividend by 17% in 2013. Telenor has grown its dividend by an average of 23% per year over the past 5 years.
Telenor is also something of a rarity among European companies — it’s a serial share repurchaser. Telenor is committed to repurchasing about 1% of its shares this year after reducing its share count by about 3% in the preceding two years.