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BT Group's (BT) dividend yield above 7.5% seems attractive for dividend-oriented investors. Recently, management maintained the dividend and mentioned a possible increase in the future.
But I don't share management's optimism. Considering pension contributions and one-time expenses, the free cash flow doesn't cover the dividend. Also, taking into account the competitive landscape and the regulatory hurdles, I don't expect the situation to improve over the next few years.
Besides, based on the multiple of my free cash flow estimates, the valuation doesn't provide any margin of safety.