Telefonica Cancels Dividend
Telefonica (NYSE: TEF) recently canceled its dividend and share-buyback policy for the year. According to the company, there is no sign of significant sales growth in 2012. The company plans to resume dividends in 2013, but at a reduced rate. This might be cause for concern for some investors. However, analysts at Goldman Sachs praised the company for this move, saying, “Our analysts believe that prioritizing liquidity and de-leveraging is the right step for Telefonica to take in the current environment, and may help the company avoid the loss of its investment grade credit rating even if the sovereign credit outlook deteriorates.” In the long run, this move will prove positive for investors and for the valuation of the company as a whole.