2Settimana·

Telefonica Dividend

I’ve been invested in Telefónica for as long as I can remember. It’s always been undervalued.

However, my system now places it in the CAUTION quadrant. Why?

It detects a persistent structural contraction in long-term revenue, reflected in a -4% CAGR over the last 10 years, while the core business requires high and ongoing capital investments for the rollout of 5G and fiber

(data from EODHD, chart from DividendQuad)

Several dividend cuts over the past 10 years, including a 50% cut this year

A recent amendment to the Spain-Brazil double taxation treaty closes a long-standing tax loophole, resulting in a structural and permanent tax increase on profits

18.06

Telefonica

Ricevuto x1758 Dividendi a 0,15 €

263,70 €

5 Commenti

Kini - Dividend Strategy@investron

2Settimana

$TEF

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Milo@Milo

2Settimana

Me too... I'm afraid I'll stop being a shareholder soon.

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Kini - Dividend Strategy@investron

2Settimana

@Milo Yeah... same here.

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portfolio_prophet_dbkwo@portfolio_prophet_dbkwo

Would you sell if you had accumulated more than 50k shares? ... That's the case with my mother—she's been accumulating shares for over 50 years without needing to sell... Could the price go up someday? A small change in value makes a big difference because of the high multiplier—what do you think? Thanks

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Kini - Dividend Strategy@investron

@portfolio_prophet_dbkwo Hi there,

The “CAUTION” quadrant means it’s very cheap (high opportunity), but there’s some structural risk (low quality). Before investing new money there, you need to do thorough research.

I can’t make a direct recommendation. But I can explain what my system shows:

• Structural revenue contraction, 10-year CAGR of -3.9% • History of dividend cuts (2021, 2022) and a striking gap between the TTM yield of 6.6% and the forward yield of 4.1% • Persistent and high Capex (fiber, 5G/6G) in a highly regulated market • The amendment to the Spain-Brazil treaty raises taxes structurally

The nuance that almost no one notices: the dividend is currently VERY well covered by cash. The payout ratio relative to free cash flow is only ~20% (the accounting losses are temporary—due to write-downs related to Hispam and restructuring—not operational).

I’ll also point out that the strategy I propose on my website allocates a maximum of 7% of the portfolio to the highest-quality stocks. A stock with the quality rating that Telefónica has today would be included at a much lower threshold, so you can get an idea of where the system places it.

However, a 50-year-old position has a ridiculously low acquisition cost, enormous unrealized capital gains, and tax implications upon sale that the algorithm doesn’t even factor in. Only she can assess that based on her specific tax situation.

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