Broker snap: BT now has scope to increase divi, says Jefferies

23rd Mar 2012 11:05

Jefferies has maintained its positive view on telecoms giant BT, saying that the group's agreement with its pension scheme trustee 'crystallises' dividend upside.BT announced this morning that it would make a payment of £2bn to reduce it pension deficit (currently valued at £4.1bn) followed by nine separate payments of £325m in March of every year to eliminate the shortfall by 2021. While there is no change in BT's dividend guidance today, Chief Executive Officer Ian Livingston did say it remains focussed on enhancing shareholder returns."Dividend upside has been a longstanding driver of our positive view on BT. Incremental positive is that upgrades may now be communicated in May, six months earlier than expected," Jefferies said.The broker said that it provides the scope for BT to increase its dividend per share (DPS) to 13-14p in the fiscal year ending March 2014, compared with its previous forecasts of 8.8-9.6p.A buy recommendation and 237p target price was reiterated.BC