Telecom with a yield of 8.5% and a rise in the share price


Mobil’nye Telesistemy holds leading positions in all its markets

To find sparkling dividends, investors sometimes have to look beyond their own borders. For example, there are many large Canadian oil and gas companies that offer reliable and high dividend yields. Investors can also find great Australian mining stocks that offer high dividends.

One country that North American investors generally overlook is Russia. But this country is home to one of the best high yielding dividend stocks, Mobil’nye Telesistemy PAO (NYSE: MBT), also known as Mobile telesystems.

With nearly 80 million subscribers, the Moscow-based company is Russia’s largest mobile communications operator and a leading provider of multimedia and digital services.

The company’s core business is mobile communications, where it occupies the No.1 position in its key Russian market in terms of revenue and subscribers, maintaining a market share of over 30%. (Source: “Reasons to invest in MTS, “Mobil’nye Telesistemy PAO”, last accessed June 21, 2021.)

Mobil’nye Telesistemy is also the No. 1 or No. 2 mobile operator in all the other countries where it operates: Ukraine, Armenia and Belarus, with total coverage of over 200 million people.

Its fixed-line telephone services include home telephony, high-speed Internet and pay-TV services in Moscow and other regions of Russia. The company ranks among the top three broadband providers and the top five pay-TV operators in Russia. (Source: “What we do, “Mobil’nye Telesistemy PAO”, last accessed June 21, 2021.)

The company’s digital services include cloud, cybersecurity, and the Internet of Things (IoT). Its menu of services includes mobile music, mobile TV and video on demand (VoD).

Since 2011, Mobil’nye Telesistemy PAO has also offered financial services (via MTS Bank) to individual and business customers. The company is also a leading supplier of handsets and accessories. In addition to having agreements with major global suppliers, it sells its own “MTS” branded products.

Coherent History of strong financial results

With the company’s presence in the rural and urban Russian market, Mobil’nye Telesistemy has a consistent history of delivering wonderful financial results. According to the company’s website, it “generates the highest levels of profitability and the most consistent CAPEX profile in the industry.” (Source: “Reasons to invest in MTS”, Mobil’nye Telesistemy PAO “, op. Cit.)

In the first quarter of 2021, the company’s total revenue grew 5.5% year-over-year to $ 1.7 billion. It reported first quarter net income of $ 217.3 million, or $ 0.25 per share. (Source: “MTS Q1 2021 Results», Mobil’nye Telesistemy PAO, May 18, 2021.)

Its mobile service revenues increased 2.3%, its cloud and digital revenues increased 28%, and its fixed line revenues increased 4.4%. The company’s retail financial technology (fintech) lending portfolio grew by around 35%.

Additionally, the company’s retail sales were strong, with a 100% year-over-year increase in online sales and a 16.4% increase in sales of handsets and accessories.

“Today, I am happy to report that MTS is off to a good start in 2021 after delivering a strong set of first quarter results. We have achieved strong top-notch performance across all four verticals: Telecommunications, FinTech, Media and Cloud and Digital Solutions, ”said Vyacheslav Nikolaev, President and CEO. (Source: “Mobile TeleSystems PJSC: MTS Reports First Quarter 2021 Results», Accesswire, May 18, 2021.)

Looking ahead, we see promising trends in 2021 – including rapid adoption of digital services as well as easing roaming headwinds linked to the pandemic – and we reaffirm our forecast for the full year … “

For 2021, Mobil’nye Telesistemy PAO expects to record growth in revenue and operating profit before depreciation and amortization (OIBDA) of at least four percent in a full year. OIBDA shows the profitability of a company in its core businesses.

Stable and solid dividends

Due to its strong presence, growing portfolio, excellent balance sheet and financial flexibility, Mobil’nye Telesistemy is able to provide investors with sparkling dividends. US stocks tend to pay their dividends on a quarterly or even monthly basis, but Mobil’nye Telesistemy stock pays its dividends on a semi-annual basis: every July and October. (Source: “Dividends», Mobil’nye Telesistemy PAO, last accessed June 21, 2021.)

MBT stock currently pays an annual dividend of $ 0.81 per share, which, at the time of this writing, translates to a yield of 8.5%. This hefty dividend could help offset recent gains in Mobil’nye Telesistemy stock.

Mobil’nye Telesistemy PAO shares are on the rise:

  • Eight percent in the past six months
  • Five percent year over year
  • Two percent since the start of the year

These aren’t exactly numbers that dominate the market, but MBT stock has solid momentum and recently broke its previous two resistance levels. Mobil’nye Telesistemy stock is also up 68% since the March 2020 low.

Graphic courtesy of StockCharts.com

Past performance is certainly not indicative of future performance, but MBT stock has room to work. It needs to climb an additional 115% to reach its December 2007 highs of around $ 19.50.

Wall Street is bullish on this dividend-paying stock. Among analysts providing a 12-month price forecast for Mobil’nye Telesistemy stock, their average price target is $ 11.20, with a high estimate of $ 11.40. This indicates a short-term increase of 17.9% and 20.0%, respectively.

The truth about Mobil’nye Telesistemy DTP

As Russia’s largest mobile communications operator, Mobil’nye Telesistemy PAO is a leader in one of the world’s major emerging markets. Russia is a large market with great potential for long-term growth.

Mobil’nye Telesistemy benefits from improving economic conditions, changing demographics, stable demand, new technologies, expansion of its services and monetization of its digital services. In addition, the company is protected by a favorable regulatory framework and high barriers to entry.

Through it all, investors can sit back and enjoy the generous 8.5% annual dividend of MBT stock.

About John Villalpando

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