Not unlike electric and water utility companies, telecommunication companies, particularly those with large wireline businesses, tend to offer above average dividends. The downside is that with the rise of wireless and internet phone services, wireline is a declining technology. I am going to take a closer look at six high yielding communications companies to see if they have a place in an income retirement portfolio. Some, like AT&T, Inc. (T) and BCE, Inc (BCE) have large, wireless operations. Others, like Centurylink, Inc. (CTL), Frontier Communications Corp. (FTR), and Windstream Corp. (WIN) have bet on mergers and acquisitions to broaden their offerings. I have also included Consolidated Communications Holdings, Inc. (CNSL) both because of its dividend yield, and because I wanted to see how lack of scale might impact a smaller company.
This chart gives a snapshot of the current values and trends for the companies’ dividends, and the profits and cash flows that support them.
|Ticker||$ Price; P/E||Market cap ($ billions)||3rd quarter 2011 dividend annualized; yield %||3rd quarter 2011 earnings $ per share||12 month $ free cash flow / share||Long term debt / capital %||5 year cumulative dividend growth %|
|FTR||5.00; 31.1||4.9||$3.00; 15||0.02||1.65||61.5||-25|
|T||29.30; 14.9||173.7||$1.72; 6.0||0.61||5.7||33||21.2|
|CTL||26.60; 24.1||22.6||$2.90; 8.3||0.34||9.2||47.5||1000.00%|
|WIN||11.83; 23.1||6.1||$1.00; 8.7||0.14||2.3||91||0|
|CNSL||19.33; 23||0.58||$1.55; 8.2||0.61||3.85||94||0|
|BCE||40.18; 15||31.3||$2.01; 5.1||0.83||7.3||46||43|
Frontier restructured itself by purchasing nearly 5 million access lines from Verizon Communications, Inc. (VZ) for $8.5 billion in cash and stock. Frontier believes it will be able to squeeze up to $600 million in annual savings once it has fully digested the near tripling of the company.To continue reading, click here.