BT Group Plc: Slipping beneath key support at 200p
- Stock hit new multi-year lows this week
- Recently, co signalled potential dividend cut next year to fund fibre broadband expansion (£400-600 million)
- Co amidst a restructuring and cost cutting exercise; 5G EE to roll out soon; Sold historic London HQ for £210 million
Like many other infrastructure and utility stocks in the UK, BT Group plc has had a tough ride.
The listed telecom company had to fight several rearguard action just to keep the company in one piece, with the OpenReach division remaining in its fold. It succeeded in this regard, but investors are still not convinced about the co’s future.
BT hit new 52-week low this week, with prices flirting at its lowest level since 2011. It’s long-term trend is firmly bearish beneath the key psychological level at 200p (see below).
With prices trading beneath its long-term moving average this year – with several re-affirmations along this falling trendline – BT appears vulnerable to a further decline into the 160p region. This level was last established as support back in 2011.
So while BT’s dividend yield of 8% look juicy, investors think this is unsustainable and are looking forward to a hefty cut in the payout. Corporate growth is also lacking.
What about other telco stocks? Hardly any better. Vodafone (VOD), for example, saw its share price break down in early 2018 and prices have been stuck in a bear trend since. It plunged to 10-year lows in May.
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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.