In a year marked by fluctuations in the telecommunications sector, T-Mobile (TMUS) stands as a resilient outlier, with shares holding steady since the start of the year. On Wednesday, T-Mobile achieved a significant milestone, revealing plans to issue its inaugural dividend to shareholders. As of present, AT&T (T) grapples with a 20% year-to-date decline in stock value, while Verizon (VZ) has seen a 12% drop.
Mike Sievert, CEO of T-Mobile, emphasized the company’s robust performance, stating, “We’re outperforming this whole sector on growth, and our capital priorities have not changed.” He reiterated T-Mobile’s commitment to fueling their historically successful business plan, encompassing both organic and inorganic growth, core operations, and adjacent ventures.
Following the announcement to issue its inaugural dividend to shareholders, T-Mobile stock surged by 4% on Thursday afternoon, reflecting investor confidence in the company’s strategic move.
Sievert outlined T-Mobile’s ambitious shareholder returns goal set in 2021, aiming for up to $60 billion within the planning horizon. He detailed the latest installment of this plan, which entails $19 billion over the next five quarters, including the maiden dividend — a substantial $3 billion annual allocation. This equates to $3.75 billion over the coming five quarters, projected to see a 10% annual increase.
In comparison, industry stalwarts AT&T and Verizon have long been recognized for their substantial dividend payouts. AT&T disburses approximately $8 billion annually, while Verizon allocates roughly $11 billion to stock dividends.
Looking ahead, Sievert is poised to capitalize on this pivotal juncture. In the second quarter, T-Mobile exceeded expectations with postpaid net additions, and experienced a lower subscriber churn rate. Though overall sales saw a 2% year-over-year dip, landing at $19.2 billion, Sievert remains optimistic about T-Mobile’s trajectory, assuring investors of industry-leading earnings growth and cash flow generation.
Sievert articulated, “What investors expect from us is ongoing, reliable growth, profitable growth that translates into industry-leading cash flow growth — and that’s what we deliver.” He emphasized T-Mobile’s consistent track record, underlining their belief that the time is ripe for the next phase of their longstanding commitment to shareholder compensation.
Notably, Wall Street resonates with this optimism towards T-Mobile. Presently, analysts’ recommendations for T-Mobile tally up to 31 Buys, 3 Holds, and a solitary Sell.
Philip Cusick of JPMorgan underscored T-Mobile’s prominence in their coverage, affirming, “T-Mobile remains our favorite stock across our coverage as we see substantial synergy and operating efficiencies driving strong EBITDA and cash flow growth, as well as substantial capital return,” in a statement issued in July.
Source: Yahoo finance