Motley Fool Income Investor recommendation Telecom New Zealand (NYSE:NZT) announced positive full-year results today, but what's most positive for investors is a new dividend payout policy.

Total revenue was up 3.6% and net earnings increased 6.3%, even after accounting for NZ$121 million in impairment charges which, in New Zealand, they call abnormal expenses. Operating expenses, though, increased 4.6% (not including the abnormal expenses), showing the impact of competition in land lines, or traditional phone services, and the increased percentage of total revenue coming from lower-margin businesses such as cell phones and Internet broadband services.

Revenue was divided this way: 71.3% from New Zealand, 27.7% from Australia, and the other 1% from other countries. Telecom New Zealand remains the dominant telecom in its country, with consumer market shares (as opposed to the business market) of 70% for national calling, or land-line service; 69% for international calling; 62% for broadband Internet; and 45% for mobile phone service.

The company has been working down debt that it had accrued after its 1999 acquisition of AAPL, a fixed-line, Internet, and mobile services company serving Australia. Net debt (total debt minus cash and short-term investments) fell 20% compared with the year-ago period to NZ$3.8 million.

The high level of debt payment will ease substantially because of the new dividend payout policy, which will return 85% of income to shareholders. Telecom New Zealand gushes dividend dollars: The yield is 7.2%.

The stock trades for 15 times the earnings expected for the fiscal year ending in June 2006. Analysts expect Telecom New Zealand to grow earnings by 4.2% a year for the next five years. Ignoring currency risks, the strong dividend plus the slow growth could still add up to a market-beating return.

A lot has happened since this company was privatized in 1990 by New Zealand and sold to Ameritech -- now part of Motley Fool Stock Advisor recommendation SBC Communications (NYSE:SBC) -- and Verizon (NYSE:VZ). Ameritech and Verizon have sold their shares, but today's owners have an expanding company, with a reasonable debt load, great market shares, and a dividend cash cow.

If owning high-dividend-paying foreign telecommunications companies interests you, also take a look at fellow Income Investor recommendation Compania de Telecomunicaciones de Chile (NYSE:CTC).

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Fool contributor W.D. Crotty owns shares in SBC and Verizon. Click here to see The Motley Fool's disclosure policy.