times article7 Dec 2017 12:07
Three companies to buy for yield (GSK MARS DC.) - ...Dixons Carphone: yield 6.3 per cent Contradictory sounds have emerged from the owner of Currys of late. Before the summer, the company appeared to vindicate the merger of Dixons Retail and Carphone Warehouse by announcing record results. Fast-forward to August and its shares dived by nearly a quarter after it warned about profits, with a sluggish domestic mobile phone market and changes to EU roaming charges hitting earnings. The shares peaked at more than 500p two years ago, compared with 161p yesterday, down 4p. The over-arching logic of the tie-up still makes sense. Consumers increasingly read the news and watch video on their mobile phones and will listen to music through a wifi-connected speaker. A retailer that can offer you smartphones and internet-connected appliances along with the internet and mobile package to fit ought to be in a strong position. Yet, on its price-to-earnings ratio, it is cheap as chips (and not microchips). Its dividend is covered handsomely by its forecast earnings. Lots can go wrong with Dixons, but a lot will have to go wrong for this valuation to make sense.