Windstream Manages Yet Again to Keep Its High-Yield Dividend at 11%

Telecom & Wireless

Published: May 8, 2013 12:15 pm

A headline came across the tape today that seems pretty innocuous on the surface. “Windstream Declares 25-Cent Quarterly Dividend” should not rattle anyone much on the surface. The problem is that, while most companies are raising their dividends, Windstream Corp. (NASDAQ: WIN) is actually a very high-yield dividend-paying communications and technology solutions stock that many investors are worried may cut the dividend.

This press release simply shows the board’s declaration of a quarterly dividend of $0.25 per common share payable July 15, 2013, to stockholders of record as of June 28, 2013. The translation is a $1.00 per share per year for its dividend, as has been the case since 2006. Windstream’s common stock dividend yield is a whopping 11.7%.

Investors have to consider that this company’s $5 billion stock valuation is leveraged up in debt with a negative net tangible value. And the $1.00 per share per year dividend compares to normalized earnings of $0.44 per share in 2012 and compares to earnings estimates of $0.44 for 2013 and $0.51 for 2014. Sales have grown in the past two years but are expected to remain somewhat flat for 2013 and 2014 around $6.1 billion. Flat sales and per share income that is half the dividend payout do not exactly fit the bill of a company that can keep maintaining a high-yield dividend forever.

Shares rose by 2% to $8.55 after the dividend news broke, against a 52-week trading range of $7.86 to $11.42. Again, this is a company that is leveraged and fits the screening criteria of a company that may have to heavily cut the dividend.

Travel Cards Are Getting Too Good To Ignore (sponsored)

Credit card companies are pulling out all the stops, with the issuers are offering insane travel rewards and perks.

We’re talking huge sign-up bonuses, points on every purchase, and benefits like lounge access, travel credits, and free hotel nights. For travelers, these rewards can add up to thousands of dollars in flights, upgrades, and luxury experiences every year.

It’s like getting paid to travel — and it’s available to qualified borrowers who know where to look.

We’ve rounded up some of the best travel credit cards on the market. Click here to see the list. Don’t miss these offers — they won’t be this good forever.