This article was originally published on Kiplinger – https://www.kiplinger.com/
Market value: $31.9 billion
Dividend yield: 3.2%
At one time, Finland-based Nokia (NOK, $5.87) was a world leader in the smartphone market. However, the company sold its smartphone business to Microsoft (MSFT) four years ago to focus instead on network and IP infrastructure, software and technology licensing.
New licensing agreements and a one-time payment from a lawsuit helped Nokia deliver 57% revenue growth last year. Licensing is the growth engine for the company, expected to fuel 10% annual gains in recurring revenues through 2020.
Nokia recently launched its end-to-end 5G Future X architecture and expanded it collaboration with China Mobile (CHL) to trial its new architecture in the China market. Capital spending will limit networking profits in 2018, but Nokia expects networking sales to climb over the next two years as 5G rollouts commence and then accelerate in 2020.
The company also anticipates cost savings from its merger with Alcatel Lucent of around 1.2 billion euros annually, beginning this year.
Bank of America analyst Tal Liani recently upgraded his rating on Nokia to “Buy,” citing improvements in company’s routers business this year and 5G rollouts beginning next year.
Nokia does pay out a dividend, but investors should know that its payout has been a little tumultuous in recent history. That is, in 2013, the company announced it would not pay a dividend for the first time in 143 years. Since then, the company has returned to payouts, and Nokia says it’s committed to growing that dividend in 2018. It targets this year’s payout at between 40% and 70% of earnings.