Frontier Dividend Cut Trumps Earnings (FTR)

Frontier Communications Corporation (NYSE: FTR) is paying a price for its earnings report decision.  As the stock screened out with an unusually high double-digit dividend yield, it was one which could not likely be sustained.  The new rate is $0.10 per share per quarter, generating a dividend yield of almost 9%, and the prior payout was $0.1875.

The company called it the strongest revenue growth since closing an acquisition and cash flow for 2011 was $1.1 billion.  Normalized earnings came in at $0.07 EPS or $69 million outside of one-time costs.  Revenue for the fourth quarter of 2011 was $1.283 million as compared to $1.29 billion in the prior fourth quarter.  Thomson Reuters had estimates of $0.05 EPS on $1.27 billion in sales.

Here is the customer roster:

• 3,103,800 residential customers
• 309,900 business customers
• grew high-speed internet customers by 9,300 to 1,764,200
• 557,500 video customers

Shares of Frontier closed up 3.5% on the day but the stock is down over 5% at $4.22 in the after-hours session.  Its 52-week trading range is $3.81 to $9.48,

Cutting a dividend is rarely good, but investors probably were expecting a cut of some sort.
 
JON C. OGG