If I’d invested £1k in BT shares 5 years ago, here’s what I’d have now

BT Group (LSE: BT-A) Shares have been disappointed for years, but that doesn’t stop investors from repeatedly trying to catch this falling knife. The telecommunications giant remains one of the most popular stocks traded in the FTSE 100despite the poor recent returns.

The company is a big wounded beast, forever being co-opted by smaller competitors in the telecoms and broadband sectors. They are the lucky ones, they don’t have to shell out money to develop and maintain infrastructure, as BT does.

It’s cheap but good value?

For a while, BT played predator, shocking Sky by moving to broadcast the Premier League. Now it has become a new premium sports joint venture with The invention of Warner Bros which will bring BT Sport and Eurosport UK together.

Earlier this month, BT reported a 3% fall in the third quarter to £5.2bn, although adjusted earnings rose by 2%, rising to more than £2bn.

BT still has £19.2bn of debt, which has risen by £1.2bn since last March. That is higher than its current market capitalization of £14.26bn. Management has been struggling to reduce spending, and the merger of Enterprise and Global to create BT Business will be delivered “material synergy” as part of a wider £3bn cost saving target. It has a long way to go, though.

Rising energy prices and rising cost pressures are also reducing the bottom line. Rising fiber costs are helping to push the annual capital expenditure bill past £5bn, while energy bills will wipe out £200m of cash flow.

But BT is building a full fiber connection “like a fury”, in the words of CEO Philip Jansen, and investors hope this will finally send a rich layer of cash flow. BT has now reached 9.6 million locations with 29% connected, which is better than expected, while the 5G mobile network has now reached 60% in the UK.

They also own the EE and Plusnet brands, which gave them the pricing power to force a 14.4% price increase for most customers this spring. And it has settled a bitter and long-running industrial dispute with workers.

BT shares went down … then up

I find it hard to get a grip on such a large, sprawling operation, but the price shows his miserable story. BT stock is down 29.19% over 12 months, and 36.96% over five years. If I had invested £1,000 in shares five years ago, I would have only £630 today.

However, I would also like the dividend, with the stock currently yielding 5.38% annually. This will offset some of those losses, even if management reduces shareholder payments in 2020 and releases them entirely in 2021.

Today’s yield is covered at a nice 2.6 times, while BT shares appear to be well priced as a result of the sea of ​​problems, trading at just seven times.

Investor sentiment has improved, with shares up 17% over the past three months, as it overshadows the wider FTSE 100’s recovery.

I would have lost money if I had bought BT shares five years ago, but I think the next five years look more promising and I will be looking for an entry point over the next few months. BT is not without risk, but about time I took the plunge and bought this FTSE 100 Recovery roll.