Interesting, I just moved FTE back on to my tracking streamer yesterday. Am considering an entry position soon, but cash is low at the moment. While I've tracked FTE off and on for over a year, I was somewhat influenced by these comments from a seeking Alpha article yesterday.
For expedience I'll fudge on the copyright length this time:
by John Grgurich
1. France Telecom (NYSE: FTE )
France Telecom is exactly what you think it is: France's answer to America's AT&T or Verizon.
The company provides land-line, cell-phone, Internet, and cable
television service to consumers and businesses throughout France, the
U.K., Spain, and Poland. By the numbers:
- We like to see dividend yields of around 3%: an arbitrary
threshold, but one we think separates the wheat from the chaff. France
Telecom's dividend is a staggering 13%, and even though it appears that
its dividend will get cut in coming years, it will still represent a
high yield. Vodafone (Nasdaq: VOD ) , the U.K.'s answer to France Telecom, pays a 3.5% yield: normally pretty good, but not compared with France Telecom.
- We like to see dividend-payout ratios of 50% or less: The lower
the percentage, the more sustainable. At 86%, France Telecom's might
seem high, but with its dominant market position in France and
surrounding countries, it almost falls into the category of a public
utility. Payout ratios of such companies can go significantly higher
than normal and still remain sustainable.
- Gross margin is an indicator of brand strength, pricing power, and
management and manufacturing efficiencies -- factors that directly
affect the bottom line. With a gross margin of 42% over the past 12
months, France Telecom has an almost 10-point edge against Vodafone. The
less money a company spends upfront, the more profit is left over at
The company was founded in 1990 and is based in Paris. And with more
than 165,000 employees, it's truly massive. As of this past January, the
company began to face some new competition in its home country, but its
command of the market still remains for now, and there's no mystery as
to how the company makes money -- a great combination.
For the telecom sector I'm long in weighting rank order: VOD TLK WIN TEF FTR with the last two being 1% positions.