European telecom stocks calling

European telecom earnings should start improving, experts say.

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From the December/January 2014 issue of the magazine.

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It’s been a difficult couple of years for European telecommunications companies, as earnings have taken a beating. But with less strain on consumer spending these days, Empire Life portfolio manager Amber Sinha says earnings should start improving and investors can enjoy stellar dividends in the meantime. Sinha expects good gains for these three companies.

Top Pick

Vivendi SA (EPA: VIV)

5.37 dividend yield

This Paris-based business is selling a number of its non-media assets to become a more pure-play telecom. This enhanced core focus could see the stock rise 20% to 40% in 2014.

Vodafone Group Plc. (NASDAQ: VOD)

4.30 dividend yield

This U.K. telecom recently sold its 45% stake in U.S. Verizon for $130 billion. Expect better performance from its European operations and 10% to 12% earnings per share growth in 2014.

Deutsche Telekom AG (DB: DTE)

5.98 dividend yield

This German telecom operates across Europe, but also has a 74% stake in Albuquerque’s T-Mobile. Expect a lot of upside in the U.S., and 25% growth in its stock price in 2014.

Dividend yield represents the investor’s percentage return on investment from dividends at its prevailing market price. (Data listed as of Nov. 7, 2013).

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