The BT share price rose 15%+ in January. Will it keep rising in 2022?

The BT (LSE: BT.A) stock price has done very well in the past month, up by almost 16%. And incidentally, this is hardly the stock’s only gain in recent times. It is also up 57% over the past year. It is now back to its pre-pandemic highs of early 2020. However, just looking at the share price data, I am not entirely certain that it can retain these levels. 

What’s up with the BT share price?

The reason for my concern is that in the past year the BT share price has actually managed to touch even higher levels. In June 2021, it reached a price of 206p, which is actually the highest level seen during the year. This was essentially part of the post-vaccine development rally that brought back investor bullishness and pushed the FTSE 100 index up. However, from mid-last year to around late October, the stock was pretty much in free-fall. And it is only since that it has started its upward journey again. 

I am optimistic, though. One crucial development has taken place in recent months that could justify a continued rise in the BT share price. And that has to do with its dividends. The company had an eye-watering dividend yield before the pandemic, but these payouts were put on hold. 

Dividends are not all bad

Last year, BT resumed its dividends. And based on the current share price, its dividend yield for its current financial year would be 3.9% as per my estimates. This is not the best yield around, especially considering that inflation is much higher than these levels, but it is still higher than the average FTSE 100 yield of 3.4% right now. Moreover, now that BT has restarted dividends, there is also hope that it could increase them.

Considering that analysts expect its earnings to rise, this appears even more likely. Needless to say, these forecasts could change in a flash if the economy were to slump again on, say, another coronavirus variant or even uncontrolled inflation. But going by what we have seen so far, the progress has largely been in the right direction.

And if it continues, it could certainly be a positive for BT’s dividend payouts in the future, but also for its stock price. The FTSE 100 stock was struggling for years even before Covid-19 struck. But with Brexit out of the way, the UK economy showing solid growth prospects, and optimism about its own performance, I think it could start rising now. 

What I’d do about the FTSE 100 stock

I bought BT stock about a couple of years ago, and its performance has been nothing to write home about. This is at least in part thanks to the pandemic. I am more hopeful for BT’s future, though I think for now its share price might just have run up a lot already. It has a price-to-earnings (P/E) ratio of 19 times, which is higher than that for the FTSE 100 as a whole. Things could change however. Later this week, the company is due to release its latest results. I will wait for them before making a call on whether to buy more of the stock or not.