This Reliable 6% Dividend Stock is Too Good to Ignore

By Andrew Mudie

After a recent trip to Europe, respected Australian investor Charlie Aitken wrote a report detailing seven takeaways that were going to influence his investing philosophy over the next 12 to 24 months. While Foolish investors know that the 12 to 24 months is a short time in the grand scheme of our investing lifetime, there was one observation that resonated with me.

Charlie noted that mobile data addiction was huge in Europe. Now, you could probably travel to any Australian city and come to the same conclusion, but his point was that it seemed people were spending more time on their phones than enjoying their holidays.

Take Advantage


The important takeaway here is that smartphone penetration is increasing worldwide, which is leading to greater and greater volumes of data being consumed all over the globe. The recommendation was to consider investments in mobile data providers and the companies that stand to profit from more users on smartphones, be that the phone manufacturers, raw materials suppliers, or even the companies that make the apps that everyone uses.

In Australia we have a few options on the local market, including Telstra Corporation Ltd (ASX: TLS), which is a crowd favourite. Investors could also look to innovative companies like TPG Telecom Ltd (ASX: TPG) or M2 Group Ltd (ASX: MTU).

Another Option

A company that may well be underappreciated by the market, and has a healthy 6% dividend to boot, is Telecom Corp of New Zealand (ASX: TEL). The $5 billion market-cap company is the second largest provider of mobile phone services in New Zealand, with a market share of 38%, and is in the process of strengthening its balance sheet in preparation for some capital management initiatives in coming years.

Importantly however, the New Zealand mobile phone market is still somewhat immature compared to Australia and the US. Additionally, New Zealand's version of the NBN will be rolling out soon which should be a catalyst for future growth.

Management is focussing heavily on balance sheet strength and maintaining the company's reliable cash flow in order to boost the dividend in future years. Unfortunately the company doesn't pay any franking credits but the yield stacks up well with its listed Australian peers.

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This little known growth stock trades on a modest valuation and pays a very juicy fully franked dividend. Find out the name of this "under the radar" ASX stock in this free report — "The Motley Fool's Top Dividend Stock 2015." But hurry… this report is only available for a limited period of time. Click here now.

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