Company Overview
Singtel is Singapore’s largest telecommunications company. Aside from its local telecom operations and its Optus subsidiary in Australia, the group derives a significant portion of its...Telecom stocks, with their recurring subscription revenue from mobile and broadband, have long been favoured as stable dividend payers.
It comes as no surprise, then, that income-focused investors may have a telecom stock or two in their portfolio.
While most focus on earnings generation to determine dividend sustainability, we think dividend-focused investors should pay more attention to free cash flow (FCF) generation instead.
After all, earnings can be impacted by non-cash items, while FCF is the tangible cash a company has after meeting its obligations.
At the end of the day, the cash dividends you receive are from a company’s FCF.
Today, we will compare Singapore Telecommunications Limited (SGX: Z74) and StarHub Ltd (SGX: CC3) to see how these local telecom giants fare in terms of their FCF payout ratios.
