TELKOM INDONESIA PERSERO-ADR (NYSE:TLK) was identified as a strong dividend candidate by our screening process, which looks for stocks with high dividend ratings while maintaining solid profitability and financial health. TLK stands out with a 7.84% dividend yield, well above industry and market averages, making it an attractive option for income-focused investors.
Key Dividend Strengths
High Dividend Yield: At 7.84%, TLK’s yield is significantly higher than the industry average (5.16%) and the S&P 500 average (2.42%).
Reliable Track Record: The company has paid dividends for at least 10 years, demonstrating consistency.
Sustainable Growth: While dividend growth has been modest (1.73% annualized), earnings growth supports future payouts.
Profitability & Financial Health
Strong Profitability (Rating: 8/10): TLK has delivered consistent profits, with a Return on Invested Capital (ROIC) of 13.74%, well above its cost of capital. Margins remain healthy, with a 15.69% profit margin outperforming most peers.
Solid Financial Health (Rating: 6/10): The company maintains a manageable debt-to-equity ratio (0.34) and could repay its debt in just 1.87 years based on free cash flow. However, liquidity ratios (Current Ratio: 0.89) are below ideal levels, though solvency metrics mitigate concerns.
Valuation
TLK trades at a reasonable P/E ratio of 11.66, below both industry and S&P 500 averages, suggesting it is undervalued relative to earnings.