The general meeting of shareholders of Telefónica, which this year is celebrated online by the Covid-19, will vote next Friday on the proposal of the board of directors of the telecommunications company of distribute a dividend of 0.40 euros in 2020 through the formula of voluntary flexible dividend ('voluntary scrip dividend'). Telefónica plans to distribute 2,000 million among its shareholders this year.
Specifically, the operator will propose to the shareholders' meeting that will be held on June 12 on second call, that both the payment of the second tranche of the 2019 dividend (0.2 euros, to be paid in June 2020) and the first tranche of the 2020 dividend (0.2 euros, to be paid in December 2020) are made through this modality.
In the presentation of the 2019 results, Telefónica confirmed the dividend of 0.40 euros per share as a reflection of the confidence in the flexibility of its business model in the present context, together with its solid liquidity position and the expected resistance of the behavior of your activity.
The executive president of Telefónica, José María Álvarez-Pallete, highlighted then that the expected free cash flow generation, added to the delay of spectrum auctions, allows the company to have a "very good dividend coverage", as well as the decision to be made using the formula of the Voluntary 'scrip dividend' helps you further preserve your financial flexibility.
"This is the most prudent approach and, at the same time, we maintain an attractive dividend policy and show confidence in the generation of free cash flow (FCF) in the company. despite the current circumstances"the manager remarked in an online meeting with the media. The last time Telefónica used the 'scrip dividend' formula to pay its shareholders was at the end of 2016, when it paid 0.35 euros per title in the November through this modality of voluntary flexible dividend.
The company promised to maintain this remuneration and, despite the difficulties derived from the Covid-19 pandemic crisis, it will fulfill this commitment, with attractive remuneration (around 10% dividend yield) and sustainable thanks to its great capacity to generate free cash flow (FCF). The data reflects that Telefónica has remunerated its shareholders with more than 10,000 million euros in the last five years.
In the sector in which Telefónica operates, around 30% of European telecommunications companies have paid their dividends. These include incumbent operators in France (Orange) and the United Kingdom (BT).
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