Sunday, April 13, 2008

My Latest Stock Find, New Zealand Telecom!

New Zealand Telecom (NZT on the NYSE) provides a full range of telecommunications products and services in New Zealand including local, national, international and value-added telephone services, cellular and other mobile services, data and internet services, equipment sales and installation. They are also the third largest telecom in Australia. I came across NZT while running a stock screening for high dividend stocks on CNBC's website. Only 4 stocks met my search criteria, with NZT being the best of the four.

Their recent share price of $14.31 is well below the 52 week high of $22.07 and they currently have a price to earnings of 2.2 with a return on equity of 47.80%. Their price to book is only 1.77 and they currently have $3.18 per share in cash. The dividend per share is $1.05, which represents a 7.4% dividend yield. They have very little debt, so when you consider all these things together, their dividend should be quite sustainable with room for increases in the near future. The also retain sufficient earnings to provide for future expansion of business. So while I found this stock while searching for a dividend play, it also fits in well as a growth stock.

To fund my purchase of NZT I sold my shares in Sara Lee (SLE) and Merchants Bank of Vermont (MBVT). While I still consider both of those companies as good long term investments, I think investing in NZT will better fit my current investment goals as far as increasing dividend income and building my cash reserves in my money market account. I also feel that NZT has a much better chance of increasing share price, providing for future capital gains. I've already placed the order to buy NZT when the market opens Monday morning. I think they will make a wonderful addition to my portfolio.

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