France Telcom (ORAN -0.93%) is a classic income stock. Its double-digit dividend yield is powered by stable cash flows in a maturing industry.
But things are changing. The company recently slashed its promised dividend payouts in order to invest more in high-growth markets. Share prices took a serious hit, which paradoxically works out all right for long-term investors. The dividend may be smaller, but it's still generous, and lower entry prices means locking in a higher yield. This is particularly interesting when you reinvest your dividend checks along the way.
So even after all the hacking and slashing, France Telecom's yield is orders of magnitude richer than American contemporaries AT&T (T -1.34%) and Verizon (VZ -0.75%). It's fully comparable to the high-yield payouts of rural American telecoms such as CenturyLink(LUMN -5.81%) and Windstream(WINMQ), but with the added bonus of growth plans in emerging markets. The French stock strikes a unique balance between generous yields, large-scale operations, and vibrant growth plans.
In this video, Fool contributor Anders Bylund explains why he owns France Telecom, and why he's not overly worried about the reduced dividends.
