5 Jul

The BT share price has increased 50%. Here’s what I am doing now

first_img Get the full details on this £5 stock now – while your report is free. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Image source: BT BT (LSE:BT-A) is up by half since the start of November. The BT share price is also in positive territory over the longer term, showing a 17% increase over the past year.Clearly there has been some positive sentiment towards the name. But is it enough to keep the price moving upwards? Here I look at what might be driving the BT share price movement and what I plan to do now.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Upside driversA number of factors have helped propel the BT share price in recent months.Along with many shares it has benefited from a bounce since the vaccination programme began at the end of the last year.I also think the fall in prices for some growth shares this year is causing many investors to reconsider value shares. BT, with its beaten down share price and relatively low price-to-earnings ratio, will have attracted attention from such bargain hunters.There is also positive news on the business front. For example, the company’s mobile operator, EE, recently boosted its 5G spectrum rights after an auction run by the government. Telecom regulator Ofcom announced that it would not price cap full-fibre broadband from BT’s Openreach division. The company responded saying it would “build like fury”.Challenges remain for the BT share priceDespite these positive developments, I think challenges remain for the company.One of the biggest is its pension liabilities. For years BT has ploughed vast sums into plugging holes in its legacy pension scheme. The biggest UK private sector pension scheme is a significant drag on the company’s prospects, in my view. As circumstances change, such as lifespans expanding or investment returns falling, the forecast pension liabilities can rise again even though the company has already put more money in to shore up the scheme. Indeed, it stumped up £1.3bn last year alone to mitigate pension deficits. That puts me off investing in BT.Meanwhile, another point weighing on the BT share price is dividend prospects.The company has announced that it plans to restart dividends in the next financial year. That could mean a payout as early as this September. However, they may be well below where they were historically. The good news I mentioned, such as full-fibre broadband and 5G, comes with a hefty price tag. BT plans to invest £12bn in the full-fibre network, for example. While that may help profits down the line, such huge expenditure will likely hit profits in the next several years.Having suspended dividends already, restoring them at a lower level may be easier for the company to do than trying to fund chunky dividends at the same time as a massive programme of capital expenditure.Why I am not buyingBT continues to have some attraction as a utility-style business. Its full-fibre network, for example, should allow it to earn decent returns while the costs of entry to competitors to build such a network would be prohibitive.But, as ever, the company seems full of potential while the realities are messier. Its pension liabilities alone could knock out years of good profits, for example – and still not be fully resolved at the end of it. With high capex planned I think shareholder returns could be limited, so am not investing in BT. The BT share price has increased 50%. Here’s what I am doing now FREE REPORT: Why this £5 stock could be set to surge See all posts by Christopher Ruane christopherruane has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.center_img Our 6 ‘Best Buys Now’ Shares Are you on the lookout for UK growth stocks?If so, get this FREE no-strings report now.While it’s available: you’ll discover what we think is a top growth stock for the decade ahead.And the performance of this company really is stunning.In 2019, it returned £150million to shareholders through buybacks and dividends.We believe its financial position is about as solid as anything we’ve seen.Since 2016, annual revenues increased 31%In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259Operating cash flow is up 47%. (Even its operating margins are rising every year!)Quite simply, we believe it’s a fantastic Foolish growth pick.What’s more, it deserves your attention today.So please don’t wait another moment. Simply click below to discover how you can take advantage of this. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Enter Your Email Address Christopher Ruane | Thursday, 18th March, 2021 | More on: BT-A last_img

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