Don't Expect T-Mobile to Pay a Dividend Anytime Soon

Don't Expect T-Mobile to Pay a Dividend Anytime Soon

Some of the big attractions for investors in the telecom industry are hefty dividend yields. Market leaders Verizon (NYSE: VZ) and AT&T (NYSE: T) offer dividend yields over 5%.

Meanwhile, the smaller T-Mobile (NASDAQ: TMUS) doesn't pay a dividend at all. The company has been plowing cash into the business over the last half decade in an attempt to catch up with Verizon and AT&T in terms of network quality, retail footprint, and customers.

Its efforts have paid off, as it's captured nearly all of the postpaid phone net subscriber additions over the last few years. (Those are the most valuable wireless subscribers.) But as the company's investments slow down, its cash-generating capabilities should explode. Management is guiding for 45% to 48% annual growth in free cash flow from 2017 to 2019. But investors shouldn't expect T-Mobile to start paying out a dividend with all that cash anytime soon.

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Source: Fool.com