4-Star Stocks Poised to Pop: Frontier Communications
Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, telecom company Frontier Communications (NYSE: FTR) has earned a respected four-star ranking.
With that in mind, let's take a closer look at Frontier's business and see what CAPS investors are saying about the stock right now.
Frontier facts
Headquarters (Founded) | Stamford, Conn. (1927) |
Market Cap | |
Industry | Integrated telecom services |
Trailing-12-Month Revenue | $5.43 billion |
Management | Chairman/CEO Mary Wilderotter CFO Donald Shassian |
Return on Equity (Average, Past 3 Years) | 22.6% |
Cash/Debt | $232.7 million / $8.2 billion |
Dividend Yield | |
AT&T (NYS: T) CenturyLink FairPoint Communications |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 92% of the 973 members who have rated Frontier believe the stock will outperform the S&P 500 going forward. These bulls include mpdelbuono and All-Star TSIF, who is ranked in the top 0.1% of our community.
Earlier this month, mpdelbuono tapped Frontier as solid way to make some income: "Oversold mixed with the 10% dividend yield makes this a great deal. Financials aren't great, but they're OK."
In fact, Frontier currently sports a particularly juicy dividend yield of 10.8%. That's higher than that of much larger telecom plays like AT&T (6.1%), Verizon (NYS: VZ) (5.6%), and Vodafone (NYS: VOD) (7.3%).
CAPS All-Star TSIF expands on the income opportunity:
My play is partially on the dividend and how that will play in this sluggish economy. ... The second issue is whether a dividend is stable. This is a tricky question with Frontier who had a history of fairly stable dividends, but cut theirs over 25% about 4 quarters ago. Is it stable now? Very hard to say, but the market currently has the P/S low as well as they doubt this, so there is some margin. ...
Frontier is highly leveraged. It's tricky to do the math as they borrow, repay debt, and run their company what the dividend security is. In other words, the dividend far exceeds the income line, but fits within the overall cash flow, barely. Frontier has taken on no new debt the last year, but their pay down on current is very negligible. ...
So far my 3-4 high dividend plays here on CAPS are starting to "come around" as the market flattens/drops. It takes 3-4 quarters to test this strategy and I'm generally not a very patient person. I'll try to give this one some time to mature.
What do you think about Frontier, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
Interested in another easy way to track Frontier?Add it to your watchlist.
At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of AT&T and Vodafone. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.
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