Is Buying Telephone and Data Systems Inc (TDS) For Its Upcoming $0.16 Dividend A Good Choice?

Brad Riley
Updated

If you are interested in cashing in on Telephone and Data Systems Inc’s (NYSE:TDS) upcoming dividend of $0.16 per share, you only have 3 days left to buy the shares before its ex-dividend date, 14 December 2017, in time for dividends payable on the 28 December 2017. What does this mean for current shareholders and potential investors? Below, I will explain how holding TDS can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. Check out our latest analysis for Telephone and Data Systems

How I analyze a dividend stock

When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:

  • Is their annual yield among the top 25% of dividend payers?

  • Does it consistently pay out dividends without missing a payment of significantly cutting payout?

  • Has dividend per share risen in the past couple of years?

  • Can it afford to pay the current rate of dividends from its earnings?

  • Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

NYSE:TDS Historical Dividend Yield Dec 11th 17
NYSE:TDS Historical Dividend Yield Dec 11th 17

Does Telephone and Data Systems pass our checks?

The current payout ratio for TDS is negative, meaning that the company is not yet profitable and is paying dividend by dipping into its retained earnings. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. TDS has increased its DPS from $0.36 to $0.62 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Relative to peers, TDS has a yield of 2.33%, which is on the low-side for wireless telcos stocks.

What this means for you:

Are you a shareholder? If TDS is in your portfolio for cash-generating reasons, there may be better alternatives out there. It may be beneficial exploring other income stocks as alternatives to TDS or even look at high-growth stocks to supplement your steady income stocks. I recommend continuing your research by checking out my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.

Are you a potential investor? Taking all the above into account, Telephone and Data Systems is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, TDS could still be an interesting investment opportunity. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Take a look at our latest free fundmental analysis to explore other aspects of TDS.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.