TM Editors' note: This article discusses a penny stock and/or microcap. Such stocks are easily manipulated; do your own careful due diligence.

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Telefonaktiebolaget LM Ericsson (ERIC) provides telecom equipment and services that are primarily used to build and facilitate mobile networks through operations in three segments: (1) networks, (2) cloud and software services, and (3) enterprises.

The firm's customers have historically been primarily wireless carriers, but the firm is making a push to cater more to other enterprises as well, both as they try to take advantage of 5G capabilities and other “as-a-service” communications platforms.

The company also licenses its patents to handset manufacturers so their devices are compatible with wireless networks.

It operates in North America, Europe and Latin America, the Middle East and Africa, South East Asia, Oceania, India, North East Asia, and internationally.

Telefonaktiebolaget LM Ericsson (publ) was founded in 1876 and is headquartered in Stockholm, Sweden

Three key data points gauge LM Ericsson or any dividend-paying firm.

The key three are:

(1) Price

(2) Dividends

(3) Returns

Those three basic keys best tell whether any company has made, is making, and will make money.

ERIC Price

Over the past year, Ericsson's share price fell about 4.5% from $5.77 to $5.51 as of Wednesday’s market close.

If LM Ericsson trades in the range of $4.50 to $8.50 this next year, its recent $5.51 share price might rise to $5.90 by next year. Of course, ERIC’s price could drop about the same $0.39 estimated amount or more.

My annual upside estimate of $0.395 however, is in line with the median of one-year target price estimates by 5 analysts tracking ERIC for brokers.

ERIC Dividend

LM Ericsson has declared variable annual dividends since April 2055. and as of 2020, they are paid semi-annually. ERIC’s most recent semi-annual dividend of $0.12 was declared on August 16  to shareholders of record on September 28th. The annual payout totaled $0.25 and was paid on October 12th.

A forward-looking $0.25 annual dividend yields 4.54% at Wednesday’s $5.51 share price.

ERIC Returns

To put it all together, add the estimated annual dividend of $0.25 to the estimated price upside of $0.39 to find a $0.64 gross gain.

At Wednesday’s $5.51 share price, a little under $1000 would buy 181 shares.

A $10 broker fee (if charged), paid half at purchase and half at sale, would cost us about $0.055 per share.

Subtracting that likely $0.055 brokerage cost from the $0.64 gross gain produces a net gain of $0.585 X 181 shares = $105.89 for a 10.59% estimated net gain.

You might choose to pounce on Telefonaktiebolaget LM Ericsson a 148-year-old Stockholm-based telephonic equipment and network services company.

Furthermore, the estimated $45.40 of annual dividend income from $1k invested is over 8 times greater than ERIC’s recent $5.51 single share price.

The exact track of LM Ericsson's ongoing future price and dividend will be determined by market action.

Remember the true value of any stock is best realized through personal ownership of shares.

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