After a strong start to 2022, the BT Group (LSE: BT.A) share price has been knocked down over the past two or three months. But after a brutal 2020, it had a strong 2021 — and I believe better times may lie ahead for BT’s long-suffering shareholders.
The BT share price gets battered
Towards the end of November 2015, the BT share price topped £5. Alas, this strength was short-lived and this FTSE 100 share soon came crashing back to earth. By the end of 2018, the shares had crashed by more than half, ending the year at 238.1p. But worse was yet to come.
The BT share price ended 2019 at 192.44p, but then the Covid-19 crisis send this stock — and most others — spiralling southwards. At its 2020 low, BT plunged to 94.68p on 3 August 2020. However, the shares then rebounded as market optimism returned, finishing 2020 at 132.25p.
Last year was the best year in a long time for the share price, which closed 2021 at 169.55p, up 28.2% for the year. What’s more, at their 2021 peak, the shares surged as high as 206.7p on 23 June 2021. But they’ve been weakening pretty much ever since.
For me, BT stands for Bargain Trade
As I write (on Wednesday morning), the BT share price stands at 182.3p, down 11.8% from its 52-week high. This values the UK’s one-time telecoms monopoly at £18bn today. To me, that’s not a huge price tag for a group with over 30 million consumer customers.
At their current price level, BT shares trade on a price-to-earnings ratio below 17.6 and an earnings yield of almost 5.7%. Also, after cancelling three dividend payouts due to Covid-19, BT has since restored its cash dividend. The dividend for 2021-22 is expected to total 7.7p, which implies a dividend yield of over 4.2% — slightly ahead of the FTSE 100’s 4% cash yield.
However, I can see three factors that might drive the BT share price higher over the coming 12 months. First, it steeply raised its prices to consumers by a record 9.3% last month. Second, the group has agreed much-reduced yearly contributions to its colossal pension scheme (which has a multi-billion-pound deficit). Third, French-Moroccan billionaire Patrick Drahi built up an 18% stake in BT in 2021. Come June, Drahi and his Luxembourg-based French telecoms firm Altice are free to make a bid for BT. Then again, I don’t see a takeover as likely, but some other corporate action might well emerge.
BT shares could be a rough ride
As I set out earlier, the BT share price has been highly volatile between 2017 and 2022. But I see scope for this Footsie stock to hit £2 and rise beyond that in 2022-23. That said, I expect BT shares to remain fairly volatile over the coming year. Hence, though I would tenatively buy this FTSE 100 share for my family portfolio for income and capital growth, I certainly wouldn’t ‘bet the barn’ on BT today!
