3 Great Reasons Why BT Group plc Is Set To Take Off

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Today I am looking at why I believe BT Group (LSE: BT-A) (NYSE: BT.US) remains an exceptional share selection despite sustained price strength since the turn of the year.

A Premier League stock pick

BT has relished the battle with satellite TV goliath British Sky Broadcasting through the roll-out of its BT Sport channels, and the company has been ambitious in backing up the bravado with bold moves to take on its rival. The firm has a great line-up of events on offer, from Barclays Premier League and FA Cup football to Aviva Premiership rugby and UFC cage fighting.

And the company's relentless pursuit of Sky shows no signs of slowing. BT purchased ESPN's channels in the UK and Ireland in February to boost its sports catalogue, while May's decision to provide its sports channels free to all its broadband customers was hailed as a masterstroke. And just last month the firm inked a wholesale deal with Virgin Media that allows BT Sport to be accessed via all of Britain's major TV platforms.

Bumper broadband operations to bolster earnings

BT has also been busy over the past few years in laying new broadband fibre across the country, and now has the capability to connect more than 16m of the country's homes and businesses to its network compared with just 11m as of last summer. BT now boasts some 1.7 million customers after acquiring half of all new UK broadband clients in March-June.

And the telecoms giant plans to keep ploughing vast sums into its network to boost its mantle as the country's foremost broadband provider. BT has vowed to keep capital expenditure stable around £2.5bn this year, which should give its already weighty infrastructure a huge shot in the arm.

The ability to provide multiple media services is increasingly viewed as an exciting earnings generator. This is evidenced by Vodafone's approach to buy Kabel Deutschland for 7.7bn euros in June, a move designed to obtain the German company's hefty exposure to the television, internet and telephone sectors on the continent. BT's growing exposure across all three entertainment services sectors thus leaves it in a position of great strength.

Dial in for double-digit dividend growth

And my belief that BT Group is on the cusp of stunning earnings growth should keep annual dividend growth rolling at a rate of double-digits. The company currently carries a dividend yield of 3.2% for the year ending March 2014 and 3.6% for fiscal 2015, according to City estimates, a solid if unspectacular outlook considering the forward average yield of 3.2% for the FTSE 100.

Still, the firm's 9.5p payout last year was up almost 15% on an annual basis, while 2014 and 2015 payouts are expected to rise to 11p and 12.5p respectively, representing annual growth of 14% for both years.

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