New Report: Telefonica SA

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Telefonica SA, known by the ticker symbol TEF, is a large-cap telecom services company, operating in the communication services business sector in Europe, the U.K and Latin America. This is my first report on Telefonica for this Viital portfolio. I have,  however, mentioned it as candidate for some of my previous six dog of the week portfolios.

Telefonica operates mobile and fixed networks in Spain (where it is the incumbent telephone operator), U.K., Germany, Brazil, and other Latin American countries. The company derives more than 30% of its revenue from Spain, close to 20% from Germany and 20% from Brazil. Its U.K. operations are held through a joint venture with Virgin Media. In Latin America Telefonica operates in Mexico, Argentina, Chile, and Peru, among others.

Additionally, it provides video/TV services; smart connectivity and services, and consumer IoT products; financial and other payment, security, cloud computing, advertising, big data, and digital telco experience services; virtual assistants; digital home platforms; and Movistar Home devices.

It also offers online telemedicine, home insurance, music streaming, and consumer loan services.

The company was incorporated in 1924 and is headquartered in Madrid, Spain.

Three key data points gauge any dividend equity or fund such as Telefonica SA:

(1) Price

(2) Dividends

(3) Returns

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

TEF Price

Telefonica’s price per share was $5.28 as of yesterday's market close. One year ago its price was $4.50. Therefore, TEF’s share price rose $0.78 or about 17.3% in the past year.

If TEF’s stock trades in the range of $4.00 to $8.00 this next year, its recent $5.28 share price might rise by $1.02 to reach $6.30 by April 21, 2023. My $1.02 upside estimate is $0.025 less than the two median of analysts target estimates for the brokerages tracking TEF.

TEF Dividends

Telefonica’s most recently declared semi-annual dividend of $0.1670 was paid December 29th 2021 to shareholders on record as of December 1st.  No 2022 dividend has yet been declared.

Telefonica SA paid its first semi- annual dividend in January 15, 1988. The dividend has been variable and interruptible over the intervening 34 years but is currently estimated to deliver a 7.58% annual yield.

TEF Returns

Adding a $0.40 TEF annual dividend to the estimated one-year price upside of $1.02 shows a $1.42 potential gross gain, per share, to be reduced by any costs to trade Telefonica SA shares.

At yesterday's $5.28 closing price per share, a little over $1000 would buy 189 shares.

A $10 broker fee (if charged) would be paid half at purchase and half at sale and might cost us about $0.05 per share.

Subtract that maybe $0.05 brokerage cost from my estimated $1.42 gross gain estimate per share results in a net gain of $1.37 X 189 shares = $258.95 for a 25.89% net gain on a $997.92 investment.

So it is that Telefonica SA (TEF) shows a possible 25.89% net gain including a 7.58% forward looking dividend yield.

Over the next year at this time our $1000 investment in TEF might generate $75.80 in cash dividends alone. Note that a single share of TEF stock bought at yesterday's $5.28 price is just just over fourteen times less than the anticipated dividend income from our $1000.00 invested. So, by my dogcatcher ideal, this may be the right time to buy TEF shares once they declare a 2022 dividend. An estimated next-year dividend from $1K invested is currently  14.35 times greater than yesterday's single share price. Consider yourself alerted. It's a sign. Go for the dividend, once one is declared!

All of the estimates above are speculation based on the past history of Telefonica SA (TEF). Only time and money invested in this stock will determine its market value.

Disclaimer:  This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a ...

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